Final answer:
After calculating the volume of the silo and the value of the grain at $2 per cubic foot, it is found that the maximum possible value of the grain is $70,687.50, which is significantly less than the reported $720,000 value. This suggests that the assets may be overvalued or other factors are at play. Option number a is correct.
Step-by-step explanation:
The student is asking whether they should be concerned about the valuation of grain stored in a silo by a grain producing company. The silo is mentioned to have a 30 feet diameter and a 50 feet height, and the grain is valued at $2 per cubic foot. To assess if the valuation is accurate, we should calculate the volume of the silo and determine if the amount of grain reported (valued at $720,000) fits within the silo.
First, we will calculate the volume of a cylinder using the formula V = πr^2h, where V is the volume, r is the radius, and h is the height. Since the diameter of the silo is 30 feet, the radius would be 15 feet. The volume of the silo is calculated as follows:
V = π(15 feet)^2(50 feet)
V = 3.14159 · 225 · 50
V = 35,343.75 cubic feet
Now, we will calculate the total value of the grain if the silo is full:
Total Value = Volume × Price per cubic foot = 35,343.75 cubic feet × $2 per cubic foot = $70,687.50
This calculated value ($70,687.50) is significantly less than the reported asset value of $720,000. Therefore, unless there are other factors not mentioned (such as additional storage areas or the grain being a specialty product valued above normal market rates), there is reason for concern that the asset may be overvalued.