What is one benefit of equipment finance for cash flow?

• A. Higher depreciation deductions
• B. Lower rentals owing to the lessor's tax benefits
• C. Elimination of all taxes
• D. Immediate ownership transfer

Answer: (B)

The main idea is that equipment finance can improve cash flow because the lender (lessor) can monetize tax benefits—such as depreciation and interest deductions—and price the lease more aggressively. This lets you make lower periodic rental payments while still using the equipment, keeping cash outlays lighter upfront and during the term. The lessor’s tax advantages help justify reduced payments, which directly improves your cash flow. Other options don’t fit because depreciation deductions would mostly benefit the owner of the asset, tax elimination isn’t possible, and ownership transfer isn’t guaranteed and doesn’t inherently boost cash flow.