LA Week 5 Lease or Purchase Space

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University of Maryland, University College *

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381

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Finance

Date

Feb 20, 2024

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docx

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LA Week 5 Lease or Purchase Space – Landlord/Tenant Notes 2 Recommendation for PI to lease or purchase space for their new facility. You: recommend whether a company should lease space or purchase space. One space is next door to their current business facility and is bigger than their current space. The other space is much larger than the current location and would accommodate growth for more than ten years and located across town. If the business purchase new space it would require a mortgage. The expense would be greater monthly expense for a new leased space. ChatGPT Based on the provided information, here are the recommendations for whether the company should lease or purchase space: Space Next Door (Larger Than Current): Lease Recommendation: Since the space next door is larger than the current facility and conveniently located, leasing could be a viable option. Leasing offers flexibility without tying up significant capital and allows the company to quickly expand its operations. Additionally, if the monthly expense for leasing is lower than the expense of obtaining a mortgage for purchasing, it could be financially advantageous in the short term. Space Across Town (Much Larger): Purchase Recommendation: Given that the space across town is much larger and can accommodate the company's growth for more than ten years, purchasing might be the preferable choice in this scenario. While it would require taking out a mortgage, owning the property offers long-term stability and potential appreciation in property value. If the company can afford the greater monthly expense associated with the mortgage compared to leasing, purchasing could provide significant benefits in the long run. In summary, leasing the larger space next door could be a practical solution for immediate expansion needs with lower monthly expenses. However, if the company aims for long-term growth and stability, purchasing the much larger space across town, despite the higher monthly expense, could offer greater benefits in the future, provided the company can manage the financial obligations associated with a mortgage.
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