Borg Security Systems Is Considering the Sale of 12,000 Shares

question 109

Multiple Choice

Borg Security Systems is considering the sale of 12,000 shares of stock to finance development of a new security product.The firm has 40,000 shares of common stock outstanding,par value of $1.00 per share.The firm has $60,000 in additional paid-in capital and $80,000 in retained earnings.Borg's investment bankers estimate that new shares will bring in $5.15 per share.If Borg goes ahead with the new stock issue,what will be the change in book value per share?

• A) −$1.00
• B) +$0.15
• C) +$0.56
• D) +$1.00
• E) $0

Recognize managerial and technical aspects of IT architecture.

Comprehend the role and structure of the application portfolio within an organization.

Distinguish between different financial measures and their application in IT project valuation (NPV, ROI, Breakeven analysis).

Understand the strategic alignment between organizational mission, IS requirements, and IT strategic planning.

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Definitions:

Pigovian Externality

A situation where a market activity imposes a positive or negative cost or benefit on a third-party that is not reflected in the market price.

Free-Rider Problem

A situation in a shared-resource system where individuals consume more than their fair share or pay less than their fair share of the cost.

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, undermining the provision of that good.

Public Goods

are commodities or services that are provided without profit to all members of a society, either by the government or a private individual or organization.