Question

11. What are two advantages to purchasing a facility? What are two disadvantages to leasing a facility?

Answer 1

Advantages of Purchasing a Facility:

· Purchasing a facility will increase the income potential. If the space and resource available is more than the minimum requirements, then the facility can be used to more extent and hence income potential will increase.

· Control will be more over the whole process. As the owner of the facility, the control over the property will lie more on your hand. Hence any changes can be carried out as required in order to increase the potential.

Disadvantages of Leasing a Facility:

· Limited Potential Earning is one of the biggest disadvantages of leasing a property. As the property or facility has been leased for a particular capacity, one cannot use more than the leased space, even if available. So this limits the potential earning. The growth will also be limited due to this reason.

· No equity and limited control is another biggest disadvantage. As you don’t own the place, you don’t have any potential capital earning. Also the control over the facility lies in the hands of the owner and their decision is considered to be final.

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