Sherpa Movers Has Just Gone Public

question 9

Multiple Choice

Sherpa Movers has just gone public.Under a firm commitment agreement,the firm received $34.40 for each of the 3.5 million shares sold.The initial offering price was $37 per share,and the stock rose to $43 per share in the first few minutes of trading.Sherpa Movers paid $896,000 in legal and other direct costs and $225,000 in indirect costs.What was the flotation cost as a percentage of the funds raised?

• A)22.91 percent
• B)23.85 percent
• C)24.49 percent
• D)26.17 percent
• E)28.60 percent

---

Definitions:

Simple Interest

Interest calculated only on the principal amount, or the initial amount of money borrowed or invested, without compounding.

GICs

A financial vehicle in Canada, Guaranteed Investment Certificates offer investors a set return rate over a defined period.

Simple Interest

Interest calculated on the principal or original amount of a loan or investment, without compounding.

GICs

Guaranteed Investment Certificates (GICs) are Canadian investment vehicles offering a guaranteed rate of return over a fixed period of time.