Okay, here is how I would start this one:

First, we recognize that Dad will save $40K for ten years and then he'll receive payments for the next 25 years. With inflation at 5% we have to find the future value of the $40K ten years from now. N=10, i=5%, PV= -40,000, PMT=0. The future value of the $40K becomes $65,155.79. Dad also has $100K saved in an account, earning 8%. What will the $100K grow to become when Dad is ready for retirement?