Final answer:
When a penny is dropped, its potential energy is converted to kinetic energy as it falls towards the ground, until just before impact where it has maximum kinetic energy.
Step-by-step explanation:
As a dropped penny falls toward the ground, energy is converted from potential energy to kinetic energy. Initially, when the penny is held at a height above the ground, it possesses gravitational potential energy. As it is released and falls, this potential energy is gradually converted into kinetic energy, which is the energy of motion, until just before it impacts the ground, at which point it has maximum kinetic energy. Upon hitting the ground, some of this kinetic energy is transformed into other forms such as thermal energy due to the impact and friction.