The answer would be "D. Paco y Luis son inteligentes." because in Spanish, agreement is a really big deal. Since there is a "y" (which means "and") you count Paco and Luis as plural. And since they are the subject of the sentence, everything should agree with them being plural and masculine. "Son" (meaning "are") is plural compared to "es" and the "-es" at the end of "inteligentes" is plural compared to "inteligente." If you look at a conjugation chart of "ser" (meaning "to be") you can further determine how to agree with the subject of the sentence. For example, if Paco and Luis were replaced with "Nosotros" (meaning "we"), then you could use "somos" instead of "son" and since "Nosotros" is still plural, we can continue using "inteligentes."
