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?

• You should accept the $89,500 today because it has the lower future value.
• You should accept the first offer as it is a lump sum payment.
• You should accept the $89,500 today because it has the higher net present value.
• It does not matter which offer you accept as they are equally valuable.
• You should accept the second offer because it has the larger net present value.