Consumers are often faced with making large purchases to satisfy life’s basic needs. If your refrigerator breaks and you don’t have much disposable income, you might turn to credit. Describe who benefits from a credit agreement and how. Why are businesses and institutions willing to offer you credit? Explain.

Suppose a creditor offers you an agreement where the interest accrues as follows:
I = Prt, where I is interest owed ($), P is the amount borrowed, r is the yearly interest rate (%), and t is time (years). What is the mathematical relationship between I and r? Between I and t? If you’re the borrower, why are these relationships important to you?