In this problem, forget about numbers for a while. Let your right brain suggest a way to tackle it.
Red Square Diaries
Determine the area of the red square.
Assume
that all lines are straight, and that all
apparent right angles are in fact right angles.

When you use your right brain, this problem can be very simple. If you're determined to use only the left hemisphere, you may succeed in making it quite difficult. See if you can solve it. If you haven't succeeded in five minutes-- or if your tolerance for frustration gets low, follow the link to a NEW WAY OF THINKING.