95% of the nails would fall within 1 standard deviation. This means 95% of the nails would be between 5 - 0.03 = 4.97 and 5 + 0.03 = 5.03 inches long.
this would mean that 5% of the nails would either be longer than 5.03 or shorter than 4.97 inches.
One half of 5% is 2.5%.
Multiply the total nails by 2.5%:
120 nails x 0.025 = 3 nails would be less than 4.97 inches.