Profitability evaluation methods for chemical process plants: identify the option that is not considered a mathematical (quantitative) method for assessing project profitability.

Introduction / Context:
When screening and ranking projects, engineers rely on quantitative methods that use time value of money and cash flow models. This question distinguishes recognized mathematical methods from items that are more policy or accounting balances rather than evaluation techniques.

Given Data / Assumptions:

• Projects have defined cash inflows and outflows over time.
• Standard plant economics methods apply (ROI, payout period, DCF).
• “Cash reserve” refers to a balance held for liquidity or contingencies, not a performance metric.

Concept / Approach:
Mathematical evaluation methods include: rate of return on investment (ROI), payout period (or payback time), and discounted cash flow (e.g., net present value over full life). These rely on formulas and cash flow timing. A cash reserve is an internal fund or buffer and not an evaluation method for profitability.

Step-by-Step Solution:
List recognized methods: ROI, payout period, DCF are all quantitative metrics.Identify outlier: “Cash reserve” is a balance or policy choice, not a profitability measure.Therefore, the correct selection is “Cash reserve.”

Verification / Alternative check:
Textbook tables of evaluation methods include NPV, IRR, DPB, ROI. None list “cash reserve” as an evaluation criterion for profitability; it affects risk and liquidity, not profitability computation.

Why Other Options Are Wrong:
Rate of return on investment: Core profitability metric.Payout period: Time-based metric of investment recovery.Discounted cash flow: Rigorous method accounting for time value of money.

Common Pitfalls:

• Confusing risk buffers (reserves) with profitability metrics.
• Ignoring the time value of money when evaluating long-life assets.

Final Answer:
Cash reserve.