Bank A is donating $ 400000 today to a charity that will establish an annual prize of $ 40000 with the first prize being awarded today. The charity can invests funds at 6% per annum. What amount of money will the banks prize be worth in its final year.

Working:

I have calculated the number of years the charity can operate at this rate to be 13.25 years. My confusion is what is the difference between the two ways of calculations below:

(1) Future Value = 400000 x (1.06)^13.25 = 865690.6

(2) Treating this as an annuity, where Payment = 40000, i= 6 and n=13.25 so FV = 800602.6

Which way of doing is correct?