The Telwar Company has just gone public. Under a firm commitment agreement, the company received $15.70 for each of the 10 million shares sold. The initial offering price was $19.10 per share and the stock rose to $21.00 per share in the first few minutes of trading. The company paid $740,000 in direct legal and other costs and $270,000 in indirect costs.

What was the flotation cost as a percentage of funds raised?