The problem can be solved using the principle of conservation of mass. According to Bernoulli's equation, the rate of flow entering the tank must equal the rate of flow leaving the tank.
- The rate of water entering the tank is:
\[
Q_{\text{in}} = A \cdot v = A \cdot 4
\]
where \( A \) is the cross-sectional area of the tube and \( v = 4 \, \text{m/s} \) is the velocity of water through the tube.
- The rate at which water exits the tank is through the hole at the bottom with an area \( \frac{A}{2} \), and the flow speed \( v_2 \) is determined by the height of the water. Since the water is rising at a steady rate, we can calculate the equilibrium point where the outflow matches the inflow.
By equating the inflow and outflow, we find that the maximum height of the water will be \( 3.2 \, \text{m} \).
Thus, the correct answer is (C).