They have discussed using some of the money raised for a one-off payment to the state, representing the bank's estimate of the present value of its future profits up to 2014, when the special dividend is due to be scrapped.
Moroney argues that with low interest rates and low inflation, the present value of future profits goes up and so do the multiples investors are willing to pay for companies with higher profit growth.
He said that Buffett is effectively offering the companies to give up future profits in order to free up capital to support their extremely risky portfolios.
Expectations about faster growth and hence higher future profits have helped to push up share prices.
In recent months, the U.S. Patent Office has put into motion proceedings that could lead key patents on embryonic stem cells to be struck down, meaning that companies that do research on the cells would not give up a share of future profits on their inventions.
Eventually, borrowers and lenders will wake up to the reality that their expectations of future growth in profits and returns were too rosy, and consumers will have to reduce their spending to bring debt back to sustainable levels.
Serum has no assured orders for the vaccine from the government so far, but billionaire Cyrus Poonawalla, who owns the firm, which is located in Pune, has decided to set up a manufacturing facility in anticipation of future demand--and, hopefully, windfall profits (See "Booster Shot").
When a business can't use up its losses by carrying them back, it carries them forward instead, offsetting future taxable profits.
Stockmarket bulls point out that productivity growth has held up better during this recession than in the past, offering better hope of faster profits growth in future.
If that means that Hollywood producers and video game programmers must give up a few bucks in profits for the chance that even one Sandy Hook experience looming in our future can be avoided, that price should willingly be paid.
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