There are two kind of project selection methods and examples of approaches that can be used with each method. Here you can find the economic model detailed but before two categories listed below;
1 Benefit Measurement Methods (Compare Approach)

Murder board

Peer review

Scoring models

Economic models

Present value

Net present value

Internal rate of return

Payback period

Costbenefit analysis
2 Constrained Optimization Methods (Mathematical Approach)

Linear programming

Integer programming

Dynamic programming

Multiobjective programming
An organization would likely consider more than one of these model when selecting a project. The project manager needs to know if the project will establish a new area of business, if it is being implemented to meet regulatory or compliance requirements or if it was choosen because it was the least expensive or most feasible solution to a problem. These reasons can impact what constraints are most flexible, and knowing this information will influence the way the project manager plans and manages the project.
Present Value:
It means the value today of future cash flows and its formula;
PV = FV / (1 + r)^{n}
PV = Present Value
FV = Future Value
r = Interest rate
n = Number of time periods
Ex:
What is the PV for $100000 with interest rate 25% after 5 years;
PV = $100000 / (1 + 0.25)^{5} = $32768
Net Present Value:
It is present value of total benefits minus the cost over time periods. Generally, if the NPV is positive the investmen is a good choice. Higher NPV means better choice, without timely manner.
Time Period 
Income 
PV of Income* 
Cost 
PV of Cost* 
0 
0 
0 
200000 
200000 
1 
50000 
45000 
100000 
91000 
2 
100000 
83000 
0 
0 
3 
300000 
225000 
0 
0 
Total 

353000 

291000 
* With 10% interest rate
Therefore, NPV = $353000  $291000 = $62000
Internal Rate Of Return:
Like interest of banks, higher IRR is better. For example if project X has 40% IRR and project Y has 20% IRR, then project X is better option. In this method, shorter payback period may be best option.
Payback Period:
This refers to the length of time it takes for the organization to recover its investment in the project before it starts accumulating profit. Shortly, shorter payback period is better option.
Cost Benefit Analysis:
This method is result of benefit cost ratio. A benefit cost ratio of less than 1 means the costs are greather than the benefits. Notice that benefit does not same as profit.