Henderson Inc. needs to raise $15 million for its research and development program. Its investment banker suggested raising the funds through the issuance of original issue discount bonds. The bonds would be outstanding for five years, have a semiannual coupon rate of 6%, and a maturity value of $1,000 each. The current market conditions require a yield of 8%, given Henderson's bond rating. Henderson's marginal income tax rate is 40%. Ignore the issue expense of the bonds and round all calculations to the nearest dollar. Assume the bonds are issued on the first day of the fiscal year.
What is the issue price of each bond? Show your calculations.