2. Progressive Corporation (a property and casualty insurance company) reported the following in its 2013 annual report: 2012 2013 Fair Carrying Fair Carrying Value Value n millions Value Value 7% Notes due 2013 (issued: $150.0, October 157.1 149.9 1993) 0.0 0.0 3.75% Senior Notes due 2021 (issued 549.1 497.3 $500.0, August 2011) 509.1 497.6 385.0 295.2 359.6 $300.0, March 1999) 295.3 6.25% Senior Notes due 2032 (issued: 513.5 394.5 473.7 $400.0, November 2002) 394.6 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (issued: $1,000.0, June 2007; outstanding 789 726.2 731.3 673.4 $677.1 and $731.2 $2,394.4 $2,073.7 $2,063.1 $1,860.9 In March 2013, we entered into an unsecured, discretionary line of credit (the "Line of Credit with PNC Bank, National Association ("PNC") in the maximum principal amount of $100 million Subject to the terms and conditions of the Line of credit documents, advances under the Line of (if bear interest at a variable rate equal to the higher of PNC's Prime Rate the of the Federal Funds Open Rate plus 50 basis points. Each advance must be repaid on the 30 date after the advance or, if earlier, on March 25, 2014, the expiration date of the Line of Credit. Prepayments are permitted without penalty. All advances under the Line of Credit are subject to discretion. We no borrowings under the Credit 2013 Aggregate principal payments on debt outstanding at December 31, 2013, is as follows (millions) Payments Year 2014 2015 0.0 2016 2017 0.0 2018 0.0 Thereafter 1,877.1 Tota 1,877.1 Required. a. What amount does Progressive report for long-term debt on its balance sheet? b. Why is there a difference between the fair value and the carrying value of Progressive's long-term debt? c. Were the 3.75% notes originally issued at par, at a discount or at a premium? How do you know? d. What is the amount of the unamortized discount on the 6.25% notes as of December 31, 2013? e. What cash interest payment did Progressive make for the 6 5/8 notes in 2013? What interest expense did Progressive record for these notes during 2013? Assume for this question that Progressive pays interest annually f Progressive were to repurchase all of its bonds on January 1, 2014, how would the income statement be affected g. How much does the company owe under the line of credit with PNC Bank at year end? Why does Progressive discuss this in its debt footnote? h. t does the footnote reveal about timing of debt due in 2014 and thereafter