To get the equivalent yearly increase of x% we use the compound formula given by:
A=P(1+r/100)^t
where:
A=amount, P=principle, r=rate, t=time
from the question:
A=£95000, P=£80000, r=x%, t=5 years
hence plugging the values we obtain:
95000=80000(1+x/100)^5
simplifying the above we obtain:
1.1875=(1+x/100)^5
1.03497=1+x/100
0.03497=x/100
thus
x=3.497~3.5%
