The Telwar Co. has just gone public. Under a firm commitment agreement, the company received $25.11 for each of the 30 million shares sold. The initial offering price was $27 per share, and the stock rose to $32.49 per share in the first few minutes of trading. The company paid $1.4 million in direct legal and other costs and $375,000 in indirect costs. What was the flotation cost as a percentage of funds raised?