Two particular methods of comparing the attractiveness of projects have become known as the “traditional techniques”. These are ARR (Accounting rate of return) and payback. I shall be discussing these first. The payback period is the length of time (in years) it takes to recover the cash invested a project. The annual cash flows of a project are used to determine the payback period. A project is worth the investment if its payback period is less than or equal to a predetermined time scale in which it is given to pay for itself. So for example, if the three years it takes to recover the investment in the project example shown above is deemed too long, the project would not be undertaken