You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why?a. You should accept the $89,500 today because it has the higher net present value.b. You should accept the $89,500 today because it has the lower future value.c. You should accept the first offer as it is a lump sum payment.d. You should accept the second offer because it has the larger net present value.e. It does not matter which offer you accept as they are equally valuable.

The option 2 must be valued in today's value (Present Value), so for this reason we will have to discount the cash flow to bring it to Year zero (Now).

Present Value of $70,000 = $70,000 / (1.115)^2 = $56,305

Present Value of the offer = $56,305 + $35,000 = $91,305

As the offer is more in value today from the option one which stands at $89,500 so the better option is Option D $91,305.