Answer: The correct answer is Zero (0).
Let us read the statements once again. "Mr. Smith had 4 daughters. Each daughter had 4 brothers."
The verb used is "had" here which means "something of the past".
Hence, literally it means at present Mr. Smith has no children as he HAD four daughters and each daughter had 4 brothers.
For eg. I had a boat when I was a child. It means the person concerned had a boat when he/she was a child.