Problemfranklin oil issued 150000 shares of stock last week, Ask an Expert

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Problem:

Franklin Oil issued 150,000 shares of stock last week. The underwriters charged a 7.5 percent spread in the exchange for agreeing to a firm commitment. The legal and accounting fees amounted to 310,000 and the company incurred $65,000 in indirect costs. The offer price was $31 a share. Within the fist hour o trading, the stock price increased to $34 a share.

Required:

Question: What was the flaotation cost as a percentage of the funds raised?

Note: Please show how to work it out.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170319

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