Welcome, xtmag. You're going to find lots of great advice here.
First - How many miles does this '87 have? If the miles are high, there are probably other things that will need fixing, besides what you mentioned. If the bottom and top end need rebuilding, I'm guessing it was rode hard and put away wet.
Also, how much is your time worth to you? If rebuilding bikes is your thing and you have time to spare, it might be worthwhile. For me, I'd pass on this one. It could end up taking you forever to get it dialed.