Difficulty: Medium
Correct Answer: High flexibility to modify the system at will (ownership control)
Explanation:
Introduction / Context:
Organizations can acquire information systems through purchase (ownership) or leasing (rental). Each path has distinct financial and operational implications. This question asks specifically for an advantage of outright purchase, not leasing.
Given Data / Assumptions:
Concept / Approach:
Ownership provides discretion over upgrades, integrations, and hardware/software modifications without seeking lessor permission (subject to warranties). Leasing typically includes bundled services (insurance/maintenance) and may shift some obsolescence risk to the lessor—but those are leasing, not purchase, advantages.
Step-by-Step Solution:
1) Evaluate option A: “No financing required; obsolescence risk to lessor” describes leasing, not purchase.2) Evaluate option B: Ownership allows greater freedom to modify—this aligns with purchase.3) Evaluate option C: Bundled rental charges again describe leasing benefits.4) Therefore, the purchase advantage is option B (flexibility to modify at will).
Verification / Alternative check:
Finance and IT procurement practices characterize leasing as preserving cash and sometimes including service bundles, while purchase grants control and may reduce long-term cost of ownership if the asset is used over many years.
Why Other Options Are Wrong:
Option A and C are classic leasing advantages. Option D incorrectly groups leasing advantages under purchase. Option E is false because purchase does offer control benefits.
Common Pitfalls:
Confusing cash-flow and risk profiles between leasing and purchasing; ignoring lifecycle costs (resale value, maintenance beyond warranty).
Final Answer:
High flexibility to modify the system at will (ownership control).
Discussion & Comments