You need to know the number of different arrangements possible for five distinct letters. You decide to use the permutations rule, but your friends tells you to use 5!. Who is correct? Explain.
Both methods are correct, since you are counting all possible arrangements of 5 items taken 5 at a time.
Your friend is correct because applying the permutations rule in this setting would be inappropriate.
Neither method is correct. The combinations rule should be applied in this setting.
Your method is correct because you are applying the permutations rule in the appropriate setting.

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It's not the last one :/

Maybe it's the first?

well, the permutation rule gives us
5!/(5-5)! = 5! so both methods are correct

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