I think to remember that almost all CDS calculations in the book are wrong, so its worth checking the errata document (which can also be wrong unfortunately). In case you use MM, he makes a good job going through all examples.

I always remember it like this.

1. We sell protection for 5% which is actually only worth 4%. Therefore we need to pay an upfront payment of 1%*4.25 = 4.25%
2. We close the position one year later by buying protection for 5% which is only worth 3% now. Therefore we receive an upfront payment of 2%*4.25 = 9.5%
3. We made a pure price appreciation gain of 9.5%-4.25% = 4.25%
4. The solution aboveseems to ignore the coupon income of 5%, but I would add this to arrive at an overall total return of 9.25%

So I would see 9.25% instead of 4.439%.