Concept:
In the binomial expansion of $(x+y)^n$, the total number of terms is always $n + 1$. The general term is given by the formula $T_{r+1} = {}^nC_r x^{n-r} y^r$. If $n$ is an even number, there is exactly one middle term located at the $(\frac{n}{2} + 1)$-th position.
Step 1: Determine the total number of terms.
The exponent in our binomial expansion is $n = 20$.
The total number of terms in the expansion is $n + 1 = 20 + 1 = 21$.
Since 21 is an odd number, there will be exactly one middle term.
Step 2: Find the position of the middle term.
The position of the single middle term for an even power $n$ is given by the formula $\frac{n}{2} + 1$:
$$\text{Position} = \frac{20}{2} + 1 = 10 + 1 = 11$$
We need to find the 11th term, $T_{11}$.
Step 3: Set up the general term formula.
To find $T_{11}$ using the formula $T_{r+1} = {}^nC_r x^{n-r} y^r$, we must set $r = 10$ so that $r+1 = 11$.
Identify the variables from the binomial $(1 + \frac{1}{5})^{20}$:
$n = 20$, $x = 1$, $y = \frac{1}{5}$
Step 4: Substitute values into the general formula.
Plug the identified values into the term formula for $r=10$:
$$T_{11} = {}^{20}C_{10} (1)^{20-10} \left(\frac{1}{5}\right)^{10}$$
Step 5: Simplify to match the options.
Since 1 raised to any power is simply 1, the $(1)^{10}$ term drops out of the equation entirely:
$$T_{11} = {}^{20}C_{10} (1) \left(\frac{1}{5}\right)^{10}$$
$$T_{11} = {}^{20}C_{10} \left(\frac{1}{5}\right)^{10}$$
Hence the correct answer is (B) ${^{20}C_{10}(\frac{1}{5})^{10}$}.