What financing method involves renting a piece of equipment for a monthly fee while retaining ownership by the leasing company?

• A. Loan
• B. Lease
• C. Mortgage
• D. Grant

Answer: (B)

Leasing is a financing method where a business rents equipment or property for a specified period in exchange for regular payments, typically made monthly. In this arrangement, the leasing company maintains ownership of the equipment, which allows the business to use it without incurring the full cost of purchasing it outright. This method is beneficial for businesses that may not want or be able to make a large upfront investment, as it frees up capital for other uses.

With a lease, businesses can also upgrade their equipment more frequently, as they can return the leased item at the end of the lease term and acquire the latest model. This flexibility is one of the key advantages of leasing over other financing options. On the other hand, loans require ownership transfer upon purchase, mortgages are specifically tied to real estate, and grants involve receiving funds that do not require repayment, which do not fit the definition of renting equipment while retaining ownership by the leasing company.