Zanders Inc. is issuing new shares in a rights offer to raise $10 million for a new project. The subscription price for each new share is $10. The company has outstanding common shares of two million and share price of $25. If the company's investment dealer charges a 5% spread on the rights offer, what is the percentage flotation cost on the net proceeds? (Round your answer to two decimal places.)

Select one:

a.5.26%

b.6.00%

c.6.38%

d.7.32%

Direct long-term financing differs from a public debt issue in terms of

Select one:

a.higher registration costs for direct financing.

b.higher distribution costs for direct financing.

c.more restrictive covenants for direct financing.

d.higher negotiation costs during default for direct financing.

e.higher interest rates in public debt issues.