The "average rate of change" means how many new mice per year
during those years.
How many are there at the end of the 2nd year ?
P(2) = 2,000(1.05)² = 2,205 mice
How many are there at the end of the 5th year ?
P(5) = 2,000(1.05 to the 5th power) = 2,552.6 mice
The average rate of change during those 3 years is (new mice in 3 years) / 3
That's (2552.6 - 2205) / 3 = 347.6 .
To the nearest whole number, it's 348 mice per year ... Choice #2.
That's a lotta mice !