Amazon S3 is the most cost-effective storage solution for retaining application log files for 7 years. S3 provides durable storage with high availability and allows concurrent access to the data, which is ideal for analysis by a reporting tool. Amazon EBS and Amazon EFS are generally more expensive for this type of use case, and an EC2 instance store is not suitable for long-term storage as the data is lost when the instance is stopped or terminated. Therefore, the correct answer is Amazon S3.