It is the last one.
A pre-image is the original before another shape is created from it, either dilated, translated, reflected, or rotated.
Using the rectangular route Mike rides 12 miles. If he rides diagonally the distance is √2²+10²=√4+100=√104.
The difference between the two routes is 12-√104=1.80 miles approximately.
Sam would have 41 pence change