Answer
The amount by which lump sum deposit is more than periodic deposits = 98888
Work Step by Step
Total amount after 25 year in lump sum deposit at 6.5% compounded interest rate
= 40000$(1+\frac{6.5}{100})^{25}$
= 40000 $\times$ 4.827699 = 193108
Total amount after 25 year in periodic deposit at 6.5% compound rate
= 1600 $\times \frac{[1-(1.065)^{25}]}{(1 - 1.065)}$
= 1600 $\times$ 58.89
= 94220
The amount by which lump sum deposit is more than periodic deposits = 193108 - 94220 = 98888
