What is a primary factor in determining the NPV of a project?

The correct answer is centered around the projected revenue generated by the project, which is crucial for calculating the Net Present Value (NPV). NPV is a financial metric used to assess the profitability of an investment by evaluating the present value of expected future cash inflows and outflows over the project's duration.

When determining NPV, the projected revenues are essential since they represent the expected benefits or cash inflows that the project is anticipated to generate. These revenues are then discounted back to their present value using a discount rate, which reflects the opportunity cost of capital and the risk associated with the investment. A higher projected revenue leads to a higher NPV, indicating that the project is likely to yield more value than the cost invested.

While costs, risks, and duration are also important factors to consider in project planning and assessment, they do not directly determine the NPV calculation in the same primary way that projected revenue does. Costs impact the cash outflows but without the projected revenues, there would be no inflow to evaluate against those costs. Understanding the expected revenue stream is foundational to establishing the financial viability and attractiveness of any project being considered.