The bond contract states. We will pay you $100 in 5 years time, and we will also pay you $5 per year.

This is expressed as a 5% interest rate on the bond. And it appears as if the government are repaying you the $100 that they borrowed when they initially sold the bond, but that part is not entirely true.

The government simply has a contract stating that they will pay $100 in 5 years time, and $5 per year for each of those 5 years. Then they put that contract up for auction.

If they have set their interest rate correctly, the market will settle on exactly $100 as the price of that bond, but it rarely goes that well. Instead they might settle on a price of $99.99 or literally any other amount. If the market buys the bonds for less than the "face value" then the interest rate was set to low, if the market settles on a price more than face value, the interest rate was too high.

It's all a bit of a balancing act. The interest rate (the profit) balances against the initial investment (the price of the bond). This is true in both the primary market (when the government initially sells the bond) as well as the secondary market (when the bond holder sells it to someone else).