A third way to check this is to build the answer from the input side rather than the output side: assume the transformer is delivering exactly its half-load output, work out what must be supplied to the primary to sustain that, and see which option matches.
Real output required at half load, 0.8 pf: \(16\) kW. Since losses must be supplied in addition to this output, the electrical input power is \(16 + 0.7 = 16.7\) kW, where the \(0.7\) kW total loss combines the fixed \(500\) W iron loss with the quarter-value \(200\) W copper loss at half current.
Building the calculation from the input side and comparing implied losses against the transformer's actual \(700\) W loss again isolates the same option.
Therefore, the correct answer is 95.81%.