The discount rate and interest rate are two different things as noted in the question and narrative.

The discount rate (as noted in the choices) refers to Present Value.

The interest rate refers to the note.

You need to record the Note at the sale price and the Sale at Present Value. The contra account would be equal to the interest.

To solve this question you need to set up an amortization schedule where the interest would decrease over time and the principal would increase over time. Therefore, if you add both of these columns together your Net Receivable balance would equal.

Answer a and b make no sense, knowing that you need to set up an amortization table, which leaves c and d. D cannot be the answer because the NR account cannot be "Less than the PV of the note discounted at 12%", as per my explanation above. Therefore, the only answer left is C.

Upon my studies I tend to get the answer simply by eliminating answer choices by process of elimination.