Consider a computer with a 4 MHz processor. Its DMA controller can transfer 8 bytes in 1 cycle from a device to main memory through cycle stealing at regular intervals. Which one of the following is the data transfer rate ($\textit{in bits per second}$) of the DMA controller if 1% of the processor cycles are used for DMA?

To calculate the data transfer rate of the DMA controller:

1. Total processor cycles per second:

   $$\text{Frequency} = 4\text{ MHz} = 4 \times 10^6\text{ cycles/second}$$

2. Cycles allocated for DMA (1% of total processor cycles):

   $$\text{DMA cycles/second} = 0.01 \times 4 \times 10^6 = 40,000\text{ cycles/second}$$

3. Data transferred per cycle:

   $$8\text{ bytes} = 8 \times 8\text{ bits} = 64\text{ bits}$$

4. Data transfer rate in bits per second (bps):

   $$\text{Data transfer rate} = 40,000\text{ cycles/second} \times 64\text{ bits/cycle} = 25,60,000\text{ bits per second}$$

Thus, option C is the correct answer.