When the government makes investment decisions, it needs to comprehensively measure the advantages and disadvantages of policies from the perspective of society, and cost-benefit analysis is the most commonly used policy evaluation method. This chapter first introduces some basic concepts of cost-benefit analysis, including calculation formula, judgment principle, analysis steps and consideration of time value. It is difficult to measure the benefit in cost-benefit analysis, so it is necessary to use "half rule" to calculate project benefit. The project benefit will have the diffusion effect, which should not be calculated repeatedly. In addition to the direct benefits mentioned above, the project will also have externalities, mainly manifested as external costs, which should also be taken into account when calculating project benefits. At the end of this chapter, some common problems of cost-benefit analysis in practice are discussed.