Last visit was: 20 Nov 2025, 03:07 It is currently 20 Nov 2025, 03:07
Home
GMAT
Messages
Tests
Schools
Events
Rewards
Chat
My Profile
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
Back to Forum
Create Topic
User avatar
pranjalshah
User avatar
Joined: 11 Dec 2023
Last visit: 10 Nov 2025
Posts: 101
Own Kudos:
127
 [17]
Given Kudos: 202
Location: India
Concentration: Operations, General Management
Schools: ISB '27 (A$$$$)
GMAT Focus 1: 735 Q90 V87 DI82
Schools: ISB '27 (A$$$$)
GMAT Focus 1: 735 Q90 V87 DI82
Posts: 101
Kudos: 127
 [17]
­The XKP Corporation needs to move its headquarters to a new facility. 07 Aug 2024, 11:56
2
Kudos
Add Kudos
15
Bookmarks
Bookmark this Post
00:00
Start Timer
Pause Timer
Resume Timer
Show Answer
Hide
Show
History
E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

35% (medium)

Question Stats:

74% (01:34) correct 26% (01:45) wrong based on 560 sessions

History

Date
Time
Result
Not Attempted Yet
­The XKP Corporation needs to move its headquarters to a new facility. It can either borrow money to buy a small building or rent a building similar to what it would buy. The corporation will have to spend more on loan payments and interest this year if it buys instead of rents. But the amount will stay fixed from year to year, while rental rates will gradually increase over the years. The company is thus likely to borrow money to purchase a building, because _________.

Which of the following most logically completes the passage?

A. the interest rate on the borrowed money would be lower than what the company pays on older loans

B. it anticipates future growth and ongoing requirements of larger facilities

C. it would be responsible for maintenance of the only suitable facility available for rent

D. it expects to rent additional, smaller facilities to support its various operations

E. It would keep the purchased building as its headquarters for more than twenty years­
ShowHide Answer
Official Answer
E
User avatar
Manushya
User avatar
Joined: 01 Dec 2023
Last visit: 09 Dec 2024
Posts: 10
Own Kudos:
8
Given Kudos: 193
Posts: 10
Kudos: 8
­The XKP Corporation needs to move its headquarters to a new facility. 10 Aug 2024, 13:55
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Hi,

It would be great if you can please explain why the answer is E. Thank you
User avatar
AR80
User avatar
Joined: 13 Mar 2023
Last visit: 18 Oct 2025
Posts: 3
Own Kudos:
5
Given Kudos: 8
Posts: 3
Kudos: 5
­The XKP Corporation needs to move its headquarters to a new facility. 11 Aug 2024, 13:33
Kudos
Add Kudos
Bookmarks
Bookmark this Post
A - The question doesn’t mention any info related to older loans. Hence, the comparison is out of context.

B - This can be considered a premise to explain why renting or buying is being contemplated. However, it doesn’t explain why the company would prefer buying over renting.

C - Irrelevant. The question doesn’t mention maintenance as a decisive factor.

D - Additional info which doesn’t explain why the company would prefer buying over renting.

E - As rents increase year on year basis, expenditure incurred in buying vis-à-vis renting would be beneficial only if the timeline is larger. Hence, E.

Posted from my mobile device
User avatar
tantway
User avatar
Joined: 18 Apr 2023
Last visit: 22 Oct 2024
Posts: 4
Own Kudos:
3
 [1]
Given Kudos: 103
Posts: 4
Kudos: 3
 [1]
­The XKP Corporation needs to move its headquarters to a new facility. 17 Oct 2024, 02:31
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
As per the premise buying will cost more this year and will have fixed amount for upcoming years but rent keep increasing every year. Since they have decided to buy we need to find a situation where buying is profitable. That's what E says : They are planning to keep this property for long time.
For 20 years or more, rent will keep increasing while if we buy it will be fixed amount post this year so buying makes sense
Manushya
Hi,

It would be great if you can please explain why the answer is E. Thank you
Show more
User avatar
Manushya
User avatar
Joined: 01 Dec 2023
Last visit: 09 Dec 2024
Posts: 10
Own Kudos:
8
Given Kudos: 193
Posts: 10
Kudos: 8
­The XKP Corporation needs to move its headquarters to a new facility. 20 Oct 2024, 12:01
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Ok, got it now. Thanks for explaining

tantway
As per the premise buying will cost more this year and will have fixed amount for upcoming years but rent keep increasing every year. Since they have decided to buy we need to find a situation where buying is profitable. That's what E says : They are planning to keep this property for long time.
For 20 years or more, rent will keep increasing while if we buy it will be fixed amount post this year so buying makes sense
Manushya
Hi,

It would be great if you can please explain why the answer is E. Thank you
Show more
User avatar
MBAApp27
User avatar
Joined: 22 Sep 2024
Last visit: 19 Nov 2025
Posts: 678
Own Kudos:
19
Given Kudos: 16
Posts: 678
Kudos: 19
­The XKP Corporation needs to move its headquarters to a new facility. 20 Oct 2024, 18:00
Kudos
Add Kudos
Bookmarks
Bookmark this Post
The answer is E)

Lets break down the problem.

The passage states:
­The XKP Corporation needs to move its headquarters to a new facility. It can either borrow money to buy a small building or rent a building similar to what it would buy. The corporation will have to spend more on loan payments and interest this year if it buys instead of rents. But the amount will stay fixed from year to year, while rental rates will gradually increase over the years. The company is thus likely to borrow money to purchase a building, because

Key things to identify here. "The corporation will have to spend more on loan payments and interest this year[u][/u] if it buys instead of rents. But the amount will stay fixed from year to year, while rental rates will gradually increase overtime.

This tells us a few things. The contrast is that the mortgage payments will be more this year than the year than rent but will stay fixed overtime while rent will increase. The passage states that the corporation is more likely to buy instead of rent. The contrast from mortgage payments being more expensive in the one year but remaining fixed while rent increases overtime indicates that there is a preference for the fixed payments because this will be a long term investment. Therefore, the answer is E) It would keep the purchased building as its headquarters for more than twenty years­
User avatar
VerbalBot
User avatar
Non-Human User
Joined: 01 Oct 2013
Last visit: 04 Jan 2021
Posts: 18,832
Own Kudos:
986
Posts: 18,832
Kudos: 986
­The XKP Corporation needs to move its headquarters to a new facility. 15 Nov 2025, 17:33
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Moderators:
GMATNinja
GMAT Club Verbal Expert
7443 posts
GMATNinjaTwo
GMAT Club Verbal Expert
231 posts
miag
189 posts