Monday, June 9, 2008

The Untold Story of Johnny Appleseed

When Johnny was 18, he inherited an empty track of land in SC and $10K from his grandparents. Being a smart entrepreneurial fellow, Johnny believed he could easily plant 1000 apple trees even though there were other struggling apples farmers in the neighborhood. All he had to do was secure the water rights that his neighbor Steve was offering for $1000/month. So he purchased the water rights and planted the trees, and within months his farm was flourishing; the apples were so plentiful he asked his siblings, Jim, Bob, Randy, and Mary to move on the farm to help. With his siblings, the farm was so efficient that his competitors eventually went out of business. Flush were success, the Appleseeds re-organized their farm. First, they decided that the little house was too small, so Johnny purchased a bigger house for $500k. Also, they were tired of sharing the same horse, so Johnny purchased each of them a new car. Finally, the Jim didn't feel like working as much, so he decided to hire Peter Red, the new kid in the neighborhood.

Despite these purchases, Johnny was financially sound because the apples were still flowing from the trees. However, one day there was a fire, and 250 trees were lost. At the end of the month, Johnny realized that he was barely breaking even after paying all of his expense; he didn't have enough money to replace the trees. The next month, Bob fell down the stairs when he was drunk. Even though Bob could now only work two days a week and needed therapy the other five days, Johnny couldn't kick Bob out of the house; Bob was his brother and he was not going to leave him behind. Instead, Johnny decided to hire Peter full time now. Because of Bob's therapy and Peter's salary, Johnny was not able to pay Steve the full $1000 that month for the water rights. However, because Steve was somewhat of an absent tenant, he liked the idea of having neighbors watch his property; as a result, he agreed to accept $500/month plus the income from 250 trees. With this agreement Johnny was able to continue farming and still break even.

The next month, Mary discovered she was pregnant and was not able to work. To make up for Mary's contribution, Johnny had to hire Peter's brother. Because of his dire financial condition, Johnny decided to offer the Reds the fruit from 250 trees every month. Even though he was caring for his siblings and their living expenses, Johnny still felt fine; after all, he still had 250 trees left. However, soon Johnny realized that his trees were getting old and bearing fewer fruit. Compounding matters, the Reds decided to quit. He started to get worried, and so he borrowed some money from his bank using the equity from his home. Using the money, he hired another worker, Dan, and all was fine again.

As he was riding down the road later that month, Johnny saw a farm with a sign reading "Red's Apples Now Open." As he pulled into the farm, he was shocked by what he saw; there were the Reds overseeing a farm of 3000 trees with a totally automated infrastructure. Even worse, the apples were selling for half of his price. When asked by Johnny how it was that they could afford the farm, given that he had 10 siblings to feed, Peter replied that instead buying a fancy house and a new car, the Reds simply saved every penny they could. When they were able to buy a farm, all of the siblings worked on it day and night, rain or shine. So dedicated were they to the farm, when one of the siblings became ill, she didn't stop working nor did the Reds even call a doctor because they felt they couldn't afford it. Eventually, she died from her illness.

As he returned home, Johnny got more bad news. Steve had noticed that his reservoir was running low and that he could buy the same apples from Red at half the price; as a result, Johnny would now have to pay the amount and the fruit from 500 trees. Running some calculations using the decreased volume, Johnny realized that he wouldn't have enough revenue to pay his all of his expenses. When he tried to get another loan from the bank using the trees as collateral, the bank told him it could only loan him $100k and would have to increase the rates because Red's farm made the loan riskier.

So Johnny went home, assuming that everything was fine. However, when he went to sell the apples to the vendor, he forgot that they no longer fetched a premium. Now he was really in trouble. After paying Steve for the water, the living and health expense for his siblings (Randy who worked, Jim who didn't, Bob who was injured, and Mary who had a kid), and the bank for his loans, Johnny was now bleeding $10K/month. Even worse, he had only $5K left in reserves. The next day, Johnny received a notice from the bank; the bank invalidated the $100k loan after it discovered that 1/4 of the trees had burned, and the other 3/4 had been promised to Steve and Dan. Johnny had 30 days to pay back the $100k.

Afraid of losing his farm, and with no one to turn to, Johnny called his old friend SunnyD for advice. After analyzing the situation, Sunny had good news; the farm could be saved but with a lot of cooperation and a lot of work. First, Johnny had to sell two of the cars, and give the proceeds to the bank to extend the second loan. Second, Johnny had to convince Mary to hire a babysitter to take of her child while she worked full time at the farm, so they could stop paying Dan. This would allow them to almost break even, after paying all of the expenses. Next, the Appleseeds had to stop going out to eat and going to the movies; this savings would allow them to buy 2 trees every month. This was not a lot, but it would eventually result in a net profit every month. Continue this for several years, they could replant all of the trees. Finally, Sunny discovered that there was actually a reservoir under the farm. However, it would take a year before he could use the water; until then he would have to pay Steve. Nevertheless, Johnny felt relief that he could be free of Steve once and for all.

In the end, the farm was saved. Are there any questions on identities of the players?

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