In order to solve this question, first let's analyze the potential energy of a mass:
The potential energy is directly proportional to the height of a mass.
Therefore, if the height doubles, the potential energy also doubles.
Since all the potential energy will be converted and used when the stone penetrates the mud, and in the second case the stone has double the energy, therefore the stone will penetrate twice as far in the mud.
So the correct option is 3.