Lois Quam

Founder, Tysvar, LLC

After accompanying Will Steger on a trip to Norway and the Arctic Circle, Lois Quam's interest in global climate change was sparked. There she witnessed firsthand the astonishing changes in the polar ice masses and the resulting impact on wildlife. Inspired by Steger's call for action to reduce global climate change, in 2009 Lois Quam left Piper Jaffray, a leading international investment bank, to become the founder and CEO of Tysvar, LLC, a privately held, Minnesota-based New Green Economy and health care reform incubator. In 2010, Quam was selected by President Barack Obama to head the Global Health Initiative. This case is a retrospective of her executive experience at Tysvar.

“I'm focused on ways to finding solutions to really significant problems and taking those ideas to full potential,” Quam said. “I want to bring the green economy to reality in a way that is much broader than financing. I want to focus on areas where I can make the most difference bringing the green economy to scale.”

Tysvar works with investors who can create the change they wish to see in the world rather than simply reacting to events as they unfold. The company is a strategic advisor and incubator of ideas, organizations, and people working to facilitate and build the New Green Economy (NGE) to scale. Tysvar's goal is to contribute to a viable, profitable, and socially responsible industry of sustainability, clean technology, and renewable energy sources.

Conscientiously working to play their part to create a more sustainable world for the next generation, Tysvar's efforts include new creation of NGE industries, jobs, and investment opportunities, contributing to building NGE public policy frameworks, trade for import/export of clean technologies, and renewable energy sources around the world.

“We stand on the brink of a very exciting time in the world,” according to Quam. The interest in developing renewable energy sources to replace dwindling fossil fuel supplies and reduce carbon dioxide emissions is worldwide. “It is a very difficult time in the financial markets right now to do this, but that will change. Good companies will find ways to get things done.”

“I am an optimist about our future,” said Quam, “Which is why I started Tysvar. The challenges we face from climate change are immense, but so are our capabilities, and the rewards and benefits to humanity are even greater in the New Green Economy.”

Lois Quam named her company after the hometown of her grandfather, Nels Quam. Tysvar is a majestically beautiful area in western Norway which is becoming a clean technology hub as part of Norway's growing NGE leadership and will soon be the site of the world's largest off-shore wind farm.

Lois Quam has continually worked for a better tomorrow. In 2005, Quam was named Norwegian American of the Year. She believes there is much to learn from Norway: From balancing work and life, allowing parents to fully participate in the economy while still being active parents, to how successfully Norway is immersing itself in new energy technologies such as wind and biomass. As an arctic oil producing nation with a carbon tax since 1993, Norway has reinvested its oil wealth to become a world leader in renewable energy.

Internationally recognized as a visionary and leader on universal health-care reform and the emerging NGE, Lois Quam embodies the skill sets needed to succeed in this new economy. Named in 2006 by Fortune magazine as one of America's “50 Most Powerful Women,” Quam has worked as head of Strategic Investments, Green Economy & Health at Piper Jaffray, a leading international investment bank; served as president and CEO of the Public and Senior Markets segment at UnitedHealth Group, a $30 billion division she helped create and run; chaired the Minnesota Health Care Access Commission, which led to legislation that brought health insurance to tens of thousands of Minnesotans; and served as a senior advisor to Hillary Clinton's task force on health-care reform. She graduated magna laude from Macalester College in St. Paul and went on to attend the University of Oxford as a Rhodes Scholar, earning a master's degree in philosophy, politics, and economics.

Lois Quam believes the New Green Economy will produce high quality jobs, improve our national security via less dependence on foreign fuels, and prevent the most damaging consequence of all: irreversible and diminishing climate change. She and Tysvar are committed to establishing universal health-care reform in America. They believe universal health care is the answer for dependable, affordable health care for all Americans and that it is necessary to help rebuild the American economy and restore American competitiveness worldwide.

Recognizing this, President Obama recently appointed Quam executive director of the State Department's Global Health Initiative. This $63 billion project will help developing countries improve their health care systems, with a special emphasis on women, children, and newborns. In accepting this position, Quam decided to step down as CEO of the company she founded and hand leadership to Norwegian Terje Mikalsen, co-founder and former chairman of Norsk Data.

“Although we are sad to see Lois leave the firm, Tysvar will continue to follow through on her vision to help bring the new green economy to scale and make quality health care affordable and accessible to everyone,” Mikalsen said on Tysvar's Web site. “We wish Lois all the best as she assumes her new position at the State Department. Her vision and leadership will help improve health care delivery and access for millions of people around the world.”

On Earth Day Lois Quam gave a speech at the University of St. Thomas on the emerging opportunities in the NGE after which she said, “I enjoyed sharing …how we can all use these key capabilities as a platform for doing something you love. Imagine: helping to build the NGE with a purposeful passion. It doesn't get much better than that!”

In another speech she illustrated her philosophy:

The change required to combat climate change and conserve biodiversity will create a change in business and society similar to the Industrial Revolution. The new energy realities require nothing short of an energy revolution, a thorough retooling of our energy economy in ways that match up with the realities of the 21st century. It will affect every aspect of daily life and business, creating an immense set of opportunities for investors, businesses and individuals.

For investors, there are highly diverse and immense opportunities to create and scale new sources of energy, adapt our current methods of production and improve daily life in ways that drive down global warming emissions.

It will also create unprecedented depth and breadth of opportunities for businesses and investors…. clean energy will always be in strong demand …the world will always have massive energy needs, and they will always have to be balanced against the needs of the environment …the clean energy industry is fueled by the laws of nature—and there is no force as powerful or promising.

Think about what we can achieve working together at this conference and as a region …and think about the time sometime in the future when our work is reaching critical mass, when our environment is safer and our energy is cleaner, when we too will have our eureka moments, our moments of life-changing and world-changing discovery.

The answering should be from your own words.

1.   How does Lois Quam use emotions and moods in her speeches to convey her viewpoint? Cite examples to support your statements.
2.   Based on what you have learned about Lois Quam, create hypotheses about the attitudes of her colleagues at Tysvar while using the three basic components of attitudes in your theories.
3.   Take a moment to research the Global Health Initiative. Why do you believe LoisQuam waschosen to lead this program?
4.   Research question: Search news reports, Web sites, and blogs to find out more information on Tysvar. How is the company faring in its quest to make the world cleaner and safer for future generations? What implications might that have on Tysvar's employees, their attitudes, and job satisfaction?

Item 6

In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

Hints

Item 7

In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

Hints

Item 8

In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

Hints

Item 9

In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

Hints

Item 10

In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.

Which of the following is true for the Student Version above?

Word-for-Word plagiarism

Paraphrasing plagiarism

This is not plagiarism

Frightened by the recession and the credit crisis that produced it, the nation’s mainstream economists are embracing public spending to repair the damage — even those who have long resisted a significant government role in a market system.

But there is not much agreement yet on what type of spending would produce the best results, or what mix of spending and tax cuts.

“We have spent so many years thinking that discretionary fiscal policy was a bad idea, that we have not figured out the right things to do to cure a recession that is scaring all of us,” said Alan J. Auerbach, an economist at the University of California, Berkeley, referring to the mix of public spending and tax cuts known as fiscal policy.

Hundreds of economists who gathered here for the annual meeting of the American Economic Association seemed to acknowledge that a profound shift had occurred

At their last annual meeting, ideas about using public spending as a way to get out of a recession or about government taking a role to enhance a market system were relegated to progressives. The mainstream was skeptical or downright hostile to such suggestions. This time, virtually everyone voiced their support, returning to a way of thinking that had gone out of fashion in the 1970s.

“The new enthusiasm for fiscal stimulus, and particularly government spending, represents a huge evolution in mainstream thinking,” said Janet Yellen, president of the Federal Reserve Bank of San Francisco. She added that the shift was likely to last for as long as the profession is dominated by men and women living through this downturn.

The few sessions that dealt with fiscal policy were packed with economists, mostly from academia. Nearly all argued that public spending can be more effective than tax cuts in getting out of a bad recession. Still, they said the present crisis required, as a tonic, a mix of the two, and they debated what that mix should be, just as President-elect Obama’s transition team is now doing.

Their proposals were all over the lot. But at the formal sessions and in more than a dozen interviews, many said that once the recession ended, the nation should not go back to the system that held sway from Ronald Reagan’s election in 1980 to the present crisis. It was one in which taxes, regulation and public spending were minimized.

For Peter Gottschalk, a labor economist at Boston College, who earned his Ph.D. in 1973, the transition has not been easy. Keynesian economics, with its emphasis on a government role in the marketplace, was losing its grip when he started his career. Indeed, the present upheaval has been outside the theoretical boundaries of mainstream economics as practiced for a generation by most of the nation’s economists.

“Our models are built on the assumption that on average people behave rationally and they do the right thing,” Mr. Gottschalk said, “but this time people did very much the wrong thing. It’s like thinking you have a disease under control and then being hit with a new strain of it.”

Since the 1970s, the Federal Reserve has dealt with recessions by lowering interest rates, thus reviving demand by making it less expensive to borrow and to spend. But this time, the credit system is broken, and those who can borrow at relatively low rates are reluctant to spend. That shifts the burden of lifting the economy to fiscal policy, namely the $600 billion to $800 billion mix of tax cuts and spending that the Obama administration and Congress are likely to agree on early this year.

Nearly every economist who spoke here agreed that a dollar invested in, say, a new transit system or in bridge repair is spent and respent more efficiently than a dollar that comes to a household in a tax cut. A bigger percentage of the latter is saved, they said. There was concern, however, that the nation lacked enough “shovel ready” projects that could be ramped up quickly, generating jobs.

What is more, the economists did not agree on the best projects to pursue. As Mr. Auerbach pointed out, after a generation of ignoring public spending in their research, the nation’s mainstream economists lacked the expertise to help guide the process. “We have not figured out the right course of action,” he said.

There were plenty of proposals at the three-day convention. Some argued for a big investment in broadband. Others proposed recruiting young people for two-year stints weather-stripping and upgrading privately owned and public buildings. Still others argued that government should step up subsidies for basic research and product innovation

And Daniel J. B. Mitchell, a professor emeritus at the University of California, Los Angeles, proposed that Washington channel money to cities with the proviso that they purchase municipal buses from General Motors, which makes them, or yellow school buses. The Ford Motor Company manufactures the school bus chassis.

“That is a better fiscal stimulus than to bail out the auto companies,” Mr. Mitchell said.

No one illustrated the conversion to fiscal stimulus more vividly than Martin Feldstein, a Harvard economist and a well-known conservative who served for a time as a top economic adviser to President Reagan. In a paper, Mr. Feldstein noted that the usual method of reviving the economy — lower interest rates — was failing to work because of “a dysfunctional credit market.”

That left fiscal stimulus to offset what he described as a decline of $400 billion a year in consumer spending. “While good tax policy can contribute to ending the recession, the heavy lifting will have to be done by increased government spending,” Mr. Feldstein said.

He pushed for big spending, carried out quickly. Among his proposals: replace depleted military supplies and equipment and step up financing for “useful research.” He also said that the shortage of “shovel ready” projects should not be a deterrent in a recession that is likely to last long enough to plan and execute new projects.

“It is of course possible that the planned surge in government spending will fail,” Mr. Feldstein said. But he expressed the “hope that the new program of fiscal spending in combination with mortgage market reforms will be sufficient to return the economy to full employment.”

I need answers for Questions 2-4 please:

Read the article: Economists Warm to Government Spending but Debate Its Form (see above.) and then answer the questions below.

Question 1 Explain what is meant by the multiplier principle

Question 2 Explain the reasons why there has been a shift in the thinking of many leading economists about the merits of fiscal policy.

Question 3 Using aggregate supply and demand diagrams, examine the factors that determine the size of the multiplier effect following an increase in government spending.

Question 4 Assess whether an increase in government spending and taxation by equivalent amounts will leave national income unchanged?

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt−equity ratio of .80. It’s considering building a new $50 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $6.2 million in perpetuity. The company raises all equity from outside financing. There are three financing options: 1. A new issue of common stock: The flotation costs of the new common stock would be 8 percent of the amount raised. The required return on the company’s new equity is 14 percent. 2. A new issue of 20-year bonds: The flotation costs of the new bonds would be 4 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 8 percent, they will sell at par. 3. Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .15. (Assume there is no difference between the pretax and aftertax accounts payable cost.) What is the NPV of the new plant? Assume that PC has a 35 percent tax rate. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)

b. Wells Printing is considering the purchase of a new printing press. The total installed cost of the press is $2.2 million. This outlay would be partially offset by the sale of an existing press. The old press has zero book value, cost $1 million 10 years ago, and can be sold currently for $1.2 million before taxes. As a result of acquisition of the new press, sales in each of the next 5 years are expected to be $1.6 million higher than with the existing press, but product costs (excluding depreciation) will represent 50% of sales. The new press will not affect the firm’s net working capital requirements. The new press will be depreciated under MACRS, using a 5-year recovery period. The firm is subject to a 40% tax rate. Wells Printing’s cost of capital is 11%. (Note: Assume that the old and the new presses will each have a terminal value of $0 at the end of year 6.) [15 marks]

i. Determine the initial investment required by the new press. [2 marks]

ii) Determine the operating cash flows attributable to the new press. (Note: Be sure to consider the depreciation in year 6.) [6 marks]

1. iii) Determine the payback period. [2 marks]
2. iv) Determine the net present value (NPV) and the internal rate of return (IRR) related to the proposed new press. [4 marks]
3. v) Make a recommendation to accept or reject the new press, and justify your answer. [1 marks]

Wells Printing is considering the purchase of a new printing press. The total installed cost of the press is $2.2 million. This outlay would be partially offset by the sale of an existing press. The old press has zero book value, cost $1 million 10 years ago, and can be sold currently for $1.2 million before taxes. As a result of acquisition of the new press, sales in each of the next 5 years are expected to be $1.6 million higher than with the existing press, but product costs (excluding depreciation) will represent 50% of sales. The new press will not affect the firm’s net working capital requirements. The new press will be depreciated under MACRS, using a 5-year recovery period. The firm is subject to a 40% tax rate. Wells Printing’s cost of capital is 11%. (Note: Assume that the old and the new presses will each have a terminal value of $0 at the end of year 6.) [15 marks]
i. Determine the initial investment required by the new press. [2 marks]
ii. Determine the operating cash flows attributable to the new press. (Note: Be sure to consider the depreciation in year 6.) [6 marks]
iii. Determine the payback period. [2 marks]
iv. Determine the net present value (NPV) and the internal rate of return (IRR) related to the proposed new press. [4 marks]
v. Make a recommendation to accept or reject the new press, and justify your answer. [1 marks]