Initial Momentum = mass of bullet * Velocity of bullet = 08 *260 = 208.0 kgm/s
Final Momentum of bullet and block of wood = ( M+m ) V = 200.8 V kgm/s
Using conservation of linear Momentum
208.0 = 200.8* V
Gives V = 1.036 m/s = Speed of Block with bullet in it
Kinetic Energy of System = 1/2 (M+m ) V2 = Gravitational Potential Energy = (M +m) gH
1/2 V2 = gH
H = V2/2g = 1.036*1.036 / (2*9.8) = 0.054 m