$40 is a bit too much, in my opinion, but that would depend on a couple of things. Where the bicycle is located (hot markets impactsvalue dramatically) and, secondly, the bike's condition.
I this case, were I preparing the bicycle, hoping to ensure road worthiness and safe to use, I would replace cables, cable casings, brake pads, and, probably tires. That would set me back about $60.00, however; I am quite capable of doing the all of the work myself. If I had to pay a bike shop, I would have to add another $60.00 at least, for labor.
So, at best and assuming a bike shop's time will be involved, total repairs will be about $120.00, making the bicycle a $180.00 investment. But you will be on the road. That said...
An old bicycle, such as the one presented, will need lubrication. Again, the bike shop will be involved and tack on another fifty or sixty bucks. I guess you can see where this is going.
The bicycle is not really worth spending a lot of money on, in my opinion. For the total you will have invested, you could get a much nicer and better bicycle in better shape. Again, my opinion.
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"98% of the bikes I buy are projects".