Real-Life Math
Your pal and neighbor, Justin Lilguy, made the mistake of going into the cable business. Everybody in your small town of Skookum wants cable TV, so Justin started up a cable company.
Unfortunately, a giant cable company bought up the services in the surrounding area and started moving into Justin's territory. He should have known not to go up against the big guys. Business was bad with a capital B and now Justin is bankrupt and in debt.
Justin has been living on a small acreage, which he uses to harvest vegetables for a living. This last business venture in the cable industry has cost him so much that he has come to you to auction the whole works off. It's sad, but he just wants to pay off his debtors and put it all behind him.
He needs to make at least $208,000 on this auction to pay off everyone, including you (for the auction service). He's hoping his property will cover that. Before you put anything on the auction block, however, you have to assess the property's worth to make sure it is going to be worthwhile.
Here's the situation:
Justin owns a total of 50 acres
38 percent of that is cultivated land
3 acres have the house and yard on them
The remaining land is uncultivated pasture
The house is 3,270 square feet
There is also a machinery shed measuring 117 feet by 42 feet
Estimated values:
Cultivated land is worth $1,050/acre
Pasture is worth $460/acre
The house is worth approximately $47/square foot
The shed should be about $12/square foot
The land under the house and yard is worth $1,460/acre
Will Justin get enough from the auction to make this job worthwhile?