Step 1: Water in the 150 L mixture = 20% of 150 = 30 L. Wine = 120 L.
Step 2: Let \( x \) litres of water be added. New total volume = \( 150+x \), new water quantity = \( 30+x \).
Step 3: Set up the equation \( \frac{30+x}{150+x} = \frac{25}{100} \).
Step 4: Solve: \( 4(30+x) = 150+x \Rightarrow 120+4x = 150+x \Rightarrow 3x = 30 \Rightarrow x = 10 \).
Step 5: So 10 litres of water must be added. Answer: option 1.