The question is :

Disregarding the time value of money, what would be the total underwriting expense expressed as a percentage of funds raised?

The answer my teacher gave is: (420,000 + 470,000) / (8,415,000 + 850,000) = 9.6% (answer)

Can someone tell me how or where they got 470,000 and 850,000 from?

TABLE1 Selected Financial Statements Balance Sheet as of December 31, 1992 $ 380,000 150,000 1,845,000 484.0 1,000,000 Cash Accounts receiv Inventories S 1,050,000 able S2,285,000 Accounts payable Notes payable Accruals S 1.777000 S 5,112,000 S 6,500,000 Current assets Net fixed assets Cret liabilities Long-term debt Total liabilities Capital stock Retained earnings Total equity Total capital Total assets S11,612,000 Income Statement for the Year Ended December 31, 1992 Sales Cost of goods sold Gross margin General/administrative expenses Lease expense Depreciation EBIT Interest expense Earnings before taxes Taxes Net Income $12.850,000 5,599,000 1,769,000 600,000 S 850,000 2,380,000 $ 850,000 1,530,000 TABLE 2 Financing Proposal Initial distribution of shares: 180,000 180,000 150,000 Parks, Van Buren& Co.840.000 1,350,000 shares at $1.00 shares at $1.00 shares at $8.50 shares at $8.50 180,000 180,000 1,275,000 7, i 40.00() $8,775,000 Rodriguez Fulton Public stockholders Underwriting costs: 5% of $7,140,000 Other fees $357.000 63.000 Payment to Saunders Net cash to Precision Tool $8,355,000 $8,250,000 S 105,000