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As a shareholder of a firm that is contemplating a new project, would you be more...

As a shareholder of a firm that is contemplating a new project, would you be more concerned with the accounting break-even point or the financial break-even point? Why?
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Answer #1

As a share holder I am more concerned with the financial break even point. If the new project exceed the accounting and cash break even point but still below the financial break even point then it causes reduction in my wealth.


From the shareholder perspective, the financial break even point is the most important. A project can exceed the accounting and

cash break-even points but still be below the financial break-even point. This causes a reduction in shareholder (your) wealth.

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