A division of Spence, Inc. has experienced a major decline in sales. Assume that the corporation prefers

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A division of Spence, Inc. has experienced a major decline in sales. Assume that the corporation prefers not to lay off any employees as a general policy. It is often suggested that this division may become a primary target for arbitrage firms. Given that the value of a division is the sum of its discounted cash flows, explain why the value of this division to an arbitrage firm may exceed its value to Spence, Inc.

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