Estimated physical returns and their calculated value net of food costs have been used as the basis for an analysis of discounted costs and returns from a selection programme for a 200-ewe flock and a 100-cow beef herd. Recording costs (computing, labour, tags, and scales) of $1-2 per ewe and $2-3 per cow are assumed, with a discount rate of 10% as used by the New Zealand Treasury. It is also assumed that no stock for breeding were purchased or sold. Results are expressed in 1979 dollars, for 1 year or round of selection applied. The net present value of 10 years of selection is $4950 or $3600 in sheep ($1 or $2 per ewe in costs) and $3670-4870 in beef cattle, depending on recording costs and the assumed level of food costs incurred by the herd in achieving higher weight-for-age. With sheep, net production is much more important than fleece weight in its contribution to higher profits. A very important contribution in the beef herd under consideration is the return from a higher net calf crop; even small percentage biological gains are of great economic importance. Net returns for a breeder also selling stock for breeding would probably be much higher.