Step 1: Intensity Formula
$I = I_{max} \cos^2\left(\frac{\Delta \phi}{2}\right)$, where $\Delta \phi = \frac{2\pi}{\lambda} \Delta x$.
Step 2: First Condition
For $\Delta x = \lambda/4$, $\Delta \phi = \pi/2$.
$I_1 = I_{max} \cos^2(\pi/4) = \frac{I_{max}}{2}$.
Given $I_1 = K/4$, so $I_{max} = K/2$.
Step 3: Second Condition
For $\Delta x = \lambda$, $\Delta \phi = 2\pi$.
$I_2 = I_{max} \cos^2(\pi) = I_{max} = \frac{K}{2}$.
Final Answer: (D)