Problem:
The Collins Co. has just gone public. Under a firm commitment agreement, Collins received $32.30 for each of the 4.13 million shares sold. The initial offering price was $34.70 per share, and the stock rose to $41.60 per share in the first few minutes of trading. Collins paid $908,000 in legal and other direct costs and $256,000 in indirect costs.
Required:
Question: What was the flotation cost as a percentage of funds raised?
Note: Please provide through step by step calculations.