Backhoe Partners （BP) sells each of its backhoes for $175,000 with an expected economi

Backhoe Partners (BP) sells each of its backhoes for $175,000 with an expected economic life of 10 years. The company also leases them directly to construction companies with good credit. If Construction Group (CG) leases the equipment from BP, the relevant interest rate is 10% and the lease payments will be $4,000 per month for four years. CG has purchased equipment in the past by financing through Prime Finance. Assuming that CG decides to lease the equipment, BP should treat the lease as a(n):

A. Direct financing lease.

B. Operating lease.

C. Sales-type lease.