In an IPO Issue,the Issuing Company Has Incurred $10 Million

Multiple Choice

In an IPO issue,the issuing company has incurred $10 million for the floatation costs and legal fees.The issue involves 50 million shares.As a firm commitment written deal,the underwriter agrees to buy the shares at $18 each and resells to the public at $20 per share.What will be the percentage of direct costs required in this deal?

A) 11.50%
B) 10.00%
C) 9.10%
D) 8.40%