• Payback period = Initial cash outlay / Annual net cash inflows
• Internal Rate of Return
• Accounting Rate of Return
• NPV[Net Present Value]
• Profitablity Index = Present Value of Cash Flow / Initial Investment
• Cost of Capital
  • Cost of debt

    Interest payments * ( 1 - tax rate )

    Average market value of Debt

  • Cost of Preferred Stock

    Preferred Dividends

    Average market value of Preferred Stock

  • Cost of Common Stock

    Dividends on Common Stock	+Expected Growth rate in dividends
    Average market value of Common Stock

Residual Income

=

Operating Income

-

Inputed interest rate * Average invested capital )