C

Step 1: Identify the relevant formula for the number of images produced by a concave mirror in a medium with a different refractive index. The formula is given by:
n = \frac{360}{\theta} - 1, where \(\theta = \sin^{-1}(\frac{1}{n})\) and 'n' is the refractive index of the second medium.
Step 2: For water, the refractive index \(n = 1.5\). Thus, we first compute \(\theta\):
\(\theta = \sin^{-1}(\frac{1}{1.5}) \approx 41.81^{\circ}\).
Step 3: Now, substituting into the image number formula:
\(n = \frac{360}{41.81} - 1 \approx 8.6 - 1 \approx 7.6\)
Since the number of images must be a whole number, we round it to 7.
Therefore, the number of images formed is 7 (option C).