3.Bond Prices and Interest Rate Changes A 7.0 percent coupon bond with semi-annual coupon payments, 20 years left to maturity and $1,000 face value, is priced to offer a 7.5 percent yield to maturity today. You believe that in one year, the yield to maturity will be 8.0 percent. If this occurs, what would be the total return of the bond in percent if you purchase the bond today and hold it for one year (2 points)?

After finding the solution, I am confused as to how the numbers worked out as such:

Current bond price:

N=20*2 = 40

I=7%/2 = 3.5%

PMT=3.5*1000 = 35

FV=1000

(this all makes sense so far, but I don't get how the answer is the following)

CPT PV = -948.62

In the same way, I understand how the following makes sense:

N=38

I=4%

PMT=35

FV=1000

but how is the answer:

CPT PV = -903.16

I've calculated this a dozen times and keep getting -1500.40 and -1396.61 respectively. Please help me understand. Thank you!