The reason why you should receive the $189,000 today because it would have a net value that's higher than the second value.
When you get the $189,000, all of that money belongs to you, you don't have to worry about the discount rate of the property. The person that buys the property would be affected by the discount rate.
But for the second offer, you would apply the discount rate.
In the second offer, you're suppose to be getting $200,000. However, the discount rate will take away some of the money.
[tex]200,000*0.0875=17,500\\\\200,000-17,500=182,500[/tex]
You would technically only get $182,000, meaning that you would be getting less than what you expected.
