Step 1: Note the fixed driving temperature difference.
Both cases share the same $\Delta T = 420 - 320 = 100\ K$, so the ratio of heat loss is just the ratio of the two conductances.
Step 2: Find the bare wire conductance.
Bare wire radius $r_1 = 0.001\ m$. Conductance per metre is $UA_1 = h \times 2\pi r_1 = 25 \times 2 \times 3.14 \times 0.001 = 0.157\ W/(m.K)$.
Step 3: Find the critical radius of insulation, for context.
$r_{crit} = k/h = 0.5/25 = 0.02\ m = 20\ mm$. Since the insulated outer radius $r_2 = 3\ mm$ is far below $r_{crit}$, adding insulation should raise heat loss, not lower it.
Step 4: Combine conduction and convection conductances in series.
$1/UA_2 = \dfrac{\ln(r_2/r_1)}{2\pi k} + \dfrac{1}{h \times 2\pi r_2} = 0.350 + 2.123 = 2.473\ m.K/W$. So $UA_2 = 1/2.473 = 0.4044\ W/(m.K)$.
Step 5: Take the conductance ratio.
$\dfrac{UA_2}{UA_1} = \dfrac{0.4044}{0.157} = 2.58$.
Final Answer:
Since $r_2$ sits well inside the critical radius, insulation increases heat loss by a factor of about 2.58, so option (A) fits.
\[ \boxed{2.58} \]