I) Simple rate of return :

– Express average annual net income as % of  the  initial amount invested in the projet.

SRR = Y-D / I

where , Y = Average annual net income

D= Annual depreciation

I= Initial investment

SRR> required rate of return ,  project accepted.

ii) Pay back period :

– Length of time required to recover the initial investment .

Pay- back period = Initial investment / annual  cash flow.

– Shorter the pay back period , project is beneficial , hence accepted.

Advantages :

a) Simple in both concept an evaluation.

b) Rough and ready method for dealing with the risk.

Limitations :

a) Fails to reconsider time value of money.

b) Ignores cash flow beyond pay back period.

Iii) Proceeds per unit of outlay :

    Proceeds  per unit  of outlay = Total value of  incremental  production/ Total amount of investment

iv) Break even analysis :

– Point at which , company is neither at profit  nor at  loss.