A compendium and comparison of 25 project evaluation techniques. Part 1: Net present value and rate of return methods

Abstract

This two-part paper presents 25 different methods and techniques used to evaluate the economic desirability of projects. We categorized these 25 methods into 5 types: net present value methods, rate of return methods, ratio methods, payback methods, and accounting methods. We provide insight into the advantages and limitations of these project evaluation methods by comparing and contrasting them. Many examples are included to illustrate the use of these methods. In Part 1, we examine net present value and rate of return methods. In Part 2, we examine ratio, payback, and accounting methods. A recap, comparison, and full summary of all 25 methods is included at the end of Part 2.