If you take a number with three digits after the decimal, and multiply it by a number with two digits after the decimal, all kinds of things can happen. You might multiply 8/25 = 0.32 by 25/8 = 3.125. Then the product is 1, and you have zero digits after the decimal. Or you might multiply 1/100 = 0.01 by 1/1000 = 0.001, and get 0.00001, and have five digits after the decimal, among other possibilities. Those examples both use both statements, so the answer is E.
Based on how they've written Statement 2 (which only says "the last digit after the decimal point in each of w and n is nonzero", since zero is the only digit that can be a multiple of ten), and based on the fact that "C" is their OA, I'm guessing they're trying to count zeros at the end of a decimal as if they're genuine digits. But that's mathematically nonsensical. The only way it even makes sense to talk about how many digits a number has after a decimal is if you ignore any zeros at the end, or else there's an infinite number of possible answers depending on how many zeros you decide to write down. The number 1.600 does not have three digits after the decimal, because if it does, it also has twenty-five if you choose to write it like this: 1.6000000000000000000000000. That number has one digit after the decimal, because it is the number 1.6.