1. **State the problem:** You borrowed 120000 at 6% per annum simple interest for 2 years. We need to find the excess amount you would pay if the interest was compounded annually instead. 2. **Calculate simple interest:** Simple Interest (SI) = Principal \times Rate \times Time $$SI = 120000 \times \frac{6}{100} \times 2 = 120000 \times 0.06 \times 2 = 14400$$ 3. **Calculate total amount with simple interest:** $$A_{simple} = Principal + SI = 120000 + 14400 = 134400$$ 4. **Calculate compound interest amount:** Compound Interest is calculated using the formula: $$A = P \left(1 + \frac{r}{100}\right)^t$$ where $P=120000$, $r=6$, $t=2$ $$A_{compound} = 120000 \times \left(1 + \frac{6}{100}\right)^2 = 120000 \times (1.06)^2 = 120000 \times 1.1236 = 134832$$ 5. **Calculate excess amount to pay:** $$\text{Excess} = A_{compound} - A_{simple} = 134832 - 134400 = 432$$ **Final answer:** You would have to pay an excess amount of 432 if the interest was compounded annually instead of simple interest.