A company plans to acquire new machinery.
It has two financing options; buy outright using a bank loan, or a finance lease.
Which of the following is an advantage of a finance lease compared with a bank loan?
A . It is "off-balance sheet" and will not affect the company’s gearing.
B . The interest rate offered might be more favourable because the lessor has the security of the asset.
C . Tax depreciation allowances may be passed on to the company by the lessor.
D . The lessor provides maintenance of the asset.
Answer: B