Joe and Mary have a nice home on the ocean. They like it and have it fixed up very nicely. They have a seven year old black Labrador dog. But, they (like a lot of people today) have a bit of a financial problem.
The house is worth between $5 Million dollars and at the most $6 Million dollars. If they were to sell the house, the selling costs (Realtors commissions and other selling expenses) would be about 8% of the sales price.
They owe about $4 Million on the house and the interest is 5% per year. They are paying Interest Only on the loan.
The taxes on the house are $15,000 a year and the other expenses are $10,000 a year.
They have $2 Million dollars in the bank from another property that they sold and that money is earning 3% a year.
Their other income from pensions and social security is $9,000 a month. They have to pay Income Tax at the rate of 30% a year on their $9,000 a month income and income tax on the Interest they get from the money that they have in the bank.
Their moms and dads can't help them out financially.
Questions:
How much total income per year do they have after paying the income taxes?
How much per year does it cost them to live in the house (interest expense, taxes, other expenses)?
Do they have enough money to continue living in the house?
Can they afford to live in the house?
What should they do? Do you have a solution to their problem?
Work independently:
Show your math.
Explain your answers.
I will wait a week. 
