I previously asked you #10 and provided your answer. I am looking for the answer to #11.

10. Quebec Sierra Corp. is considering investing in one of two projects.Project A requires an initial outlay of $10 million and generates a constant income stream of $2 million dollars at the end of each of the next ten years.Quebec Sierra will finance Project A with a mix of debt and equity as follows: 30% debt and 70% equity.For Project A the cost of debt is 4.6% and the cost of equity is 8.0%.Assume that Project A has no residual or salvage value at the end of 10 years.Project B requires an initial outlay of $8 million and generates a constant income stream of $3 million dollars at the end of each of the next five years.Quebec Sierra will finance Project B with a mix of debt and equity as follows: 40% debt and 60% equity.For Project B the cost of debt is 6.5% and the cost of equity is 9.0%.Assume that Project B has no residual or salvage value at the end of 5 years.Based on this information, which project should Quebec Sierra choose?

Project A= (-10,000,000+2,000,000 x (1-(7.98)^10)/6.98= NPV of 4,060,159

Project B= (-8,000,000+3,000,000 x 1-(9)^5)/8= NPV of 3,978,130

Quebec Sierra should select Project A.

11. This question is based on #10 above.Financial analysts employed by Quebec Sierra become aware that for the last five years, the Federal Reserve has been aggressively expanding the money supply, which has kept interest rates artificially low.Create a scenario analysis for Projects A and B with this new information in mind.Consider the effects of artificially low interest rates on malinvestment, the probability of default, and/or the effect of recession on the potential income stream of each project.In creating this scenario analysis, modify the parameters (i.e., the values) in Question #10 to reflect the changing conditions.Please feel free to support your scenarios with material from our readings and discussion (especially from Module 4).