To identify compound D in the given sequence of reactions, let's analyze each step carefully:
- Starting compound is \(CH_3CH_2OH\) (ethanol).
- The first reaction with \(P\) and \(I_2\) converts ethanol to ethyl iodide \(CH_3CH_2I\) (compound A). This is a substitution reaction where iodine replaces the hydroxyl group.
- Next, ethyl iodide reacts with magnesium in dry ether to form an organomagnesium compound (Grignard reagent), \(CH_3CH_2MgI\) (compound B).
- The Grignard reagent \(CH_3CH_2MgI\) then reacts with formaldehyde \(HCHO\) followed by hydrolysis with water \(H_2O\). This reaction forms an alcohol as the product (compound D).
The reaction between a Grignard reagent and formaldehyde always yields a primary alcohol with one additional carbon atom compared to the Grignard's alkyl group. Here, the ethyl group \((C_2H_5-)\) gains one carbon atom from formaldehyde, forming n-propyl alcohol \((CH_3CH_2CH_2OH)\).

Thus, the correct answer is n-propyl alcohol.