Extermination Quest

A local farmer has been having trouble with some Giant Rats that are destroying his crops, and he has turned to you for help. You figure you could use the extra practice and have agreed to help him get rid of the annoying pests. Upon examination of the problem, you realize that it is bigger than you had anticipated. You expect the job will take about 3 days. You presently have 100 experience points and gain experience at a rate of 5% per day. What will you do on the third day when the Queen of the Giant Rats shows up? The Rat Queen requires at least 120 experience points to defeat.

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Next Quest: Responsible Warrior
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Responsible Warrior Quest

You finally decide to heed the advice from your mother about being a responsible warrior. So you go to the nearest Bank of a Warrior and put 100 gold coins into your new account. The bank guarantees a 6% rate of return compounded annually, and you come back 10 years later to check on your investment. Will you be able to use the money in your account to buy a new ultra-light War Hero bow? The bow costs 200 gold coins.

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Main Story:
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Lesson 1: Time Value of Money

The climb up the rock face was tougher than you expected. Handholds were sparse and the ones you managed to find were sharp and jutted out at odd angles. You had to double back several times and find a new path up the mountainside. Now you feel a cold chill in the air and notice the sun beginning to sink behind the hills. Looking up, you spot a cutout in the rock face several yards away – it could be a cave. Half an hour later, your fingers grasp the edge of the cutout. Your muscles strain to pull your tired body inside. You roll onto your back and sigh heavily. Thankfully, it is a cave.

You awaken to the sound of birds tweeting. You sit up quickly and look around, your right hand instinctively gripping the hilt of your sword. You hadn’t meant to fall asleep at the mouth of cave. Luckily, you hadn’t rolled off in your sleep. You peer over the edge of the cliff to see how far you had climbed the day before. The ground is several hundred yards away, and you are rather pleased with yourself. Then you recall the instructions given to you by one of the elders of the nearby town. This might be the very cave that holds the rare treasure you seek. You whip out your torch and proceed into the depths of the cave.

After what seems like hours of walking, you reach what looks to be a dead end. You look back in the direction you came thinking you might have missed something. But then on closer inspection of the cave wall, you notice a small hole. You look through the hole, but it’s too dark too see anything. It could be an area that has been closed off, so you take your sword and drive it into the hole. The wall suddenly begins to crack and crumble. You kick and push your way through the rest of the broken wall and find yourself in an open cavern. The room is empty other than a reservoir of water in the middle. “This has to be it!” you think excitedly. You recall the elder’s words: Drink from the pool and a great power shall appear to aid you on your quest. As you stoop down to drink the water, you envision your dreams coming true.

The water is cool but tastes bitter, and as you’re drinking, a bright light suddenly flashes behind you. You turn to see a green fairy-like creature hovering a few feet in front of you.

“Hello! Did you summon me?” the creature chimes. You stare at the creature, confused. This couldn’t really be the great power the elder was talking about.

“I get that look a lot,” the creature says, “I know my incredible beauty can be perplexing at times. But don’t worry, young warrior, I have the ability to train you. You will achieve the Master level if you follow all of my instructions. By the way, I am Celia, your new mentor.” Celia hovers toward you, her wings flitting rapidly.

“You are a strong warrior physically, but intellectual strength is the more important factor in becoming a Master-level warrior. I’m going to teach you an advanced art that will boost your strength and give you the intellectual capacity to reach the Master level. It is called accounting.” Celia looks at you expectantly, but you’re not amused. Whatever accounting is, it sounds boring.

“The art of accounting will give you the information you need to make smarter decisions on and off the battlefield. You will be able to fight better and train smarter.” Celia pauses, and you shrug. She sighs and starts flying towards the cave exit.

“Where are you going?” you ask.

“Follow me”, she calls out and flits away into the dark.

After you have been walking for a few minutes, Celia stops abruptly in front of you. She waves her hand and a passageway opens in the wall. You follow the fairy through a corridor which spirals downward. It eventually leads you outside, back to the base of the mountain.

Celia turns toward you. “Alright, lesson one. I am going to teach you a powerful concept called the Time Value of Money.”

“The time val-what?” you question. Celia ignores you and continues, “The value of money changes with time. In other words, a dollar today has more value or is worth more than a dollar tomorrow.”

“How in the world is that possible?” you ask.

“I will give you an example to make it easier to understand. See those woods over there?” Celia points toward a small forest east of the mountain. “There are a group of goblins lurking in there waiting to kill and loot unsuspecting travelers. I want you to go defeat them.”

“Alright!” you shout excitedly and unsheathe your sword.

“But you have to give me your sword,” Celia replies.

“What?! Why?”

“Why does it matter? I’ll give you your sword later…” Celia responds calmly.

“But if I’m going to defeat the goblins, I’m going to need my sword now!” you argue frustratingly.

“Exactly!” Celia exclaims. “Do you value your sword more now or later?”

“Obviously now.”

“Yes, your sword is worth more now, because of what you can do with it now. You can’t kill goblins or gain experience now if you get your sword later,” Celia explains. “It is the same with the time value of money. Money is worth more today because of what you can do with it today. You cannot invest in something today with money that you can’t get until later.”

“I think I gained some intellectual XP.”

“Let’s go a little deeper,” Celia says. “You say that having your sword now is worth more than having it later. Well, let’s say we replace the sword you get later with a more powerful weapon, a battle axe. Would you rather have your sword now or the battle axe later?”

“I’m not sure,” you reply. “I really like having my sword now, but the battle axe is pretty cool.”

“Here is the point. Having your sword now is basically equivalent in value to the battle axe later. Why? Well, the extra power of the battle axe makes up for the fact that you can’t use it until later. With the time value of money, an amount that you can use now is considered equivalent to a larger amount that you can’t use until later.”

“I suppose that makes sense,” you say.

“It’ll make more sense as we continue to talk about it,” Celia replies encouragingly. “This next part is pretty straightforward. An amount of money that you can use or get today is a present value. An amount of money that you can’t use or get until later is a future value. For example, we could consider your current strength as a present value. It is the amount of strength you have available to utilize today. The strength that you will have in the future is a future value. You don’t have access to that strength yet, but you will.”

“Ok. I get it.”

“The difference between present and future value depends on how quickly money gains interest and how long it gains interest. The difference between your present strength and a future strength depends on how quickly you gain experience and how long you spend building the experience. As you defeat monsters and gain experience, your present strength increases and gets closer to a future strength.”

“Wow, this is kind of a lot,” you say, leaning against a nearby tree.

“I know,” Celia replies, “but I have now given you a valuable piece of the foundation you need to become a higher level warrior. You now understand that time changes the value of things. You understand the gap between your current and future strength. You understand that by increasing the rate at which you gain experience, you can reach Master level more quickly. You also know that to predict your future strength, you simply need to know your present strength, the length of time, and how quickly you will gain strength. In accounting, you understand the meaning of the time value of money. You also understand the relationship between present value and future value.”

Celia clapped her little green hands together. “Well, that’s enough for today. Tomorrow we will pick up your training where we left off. Until then, why don’t you go increase the rate of your experience by defeating some nearby monsters.”

“Do I get to use my sword?” you ask eagerly.

“Of course,” Celia chuckles.

*                          *                          *                          *

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Lesson 2: Financial Statements – Part 1

The ancient forest gives you an eerie feeling despite its magnificence. The wind whistles through the leaves of the enormous trees that tower over you. Sunlight glistens through the trees giving the forest floor a speckled appearance. There is a slight chill, and a faint mist lingers in the air. You climb over a large, gnarled tree root and land on a pile of leaves. The leaves crack and crumple under the weight of the impact. Moments later, an arrow whizzes by within inches of your face.

You immediately drop to the ground and grip your sword tightly. You look up and see a goblin arrow lodged in the gnarled tree root. Your heart is pounding, adrenaline is pumping through your veins, and your instincts take over. You whip out your sword and shield, quickly scan the area, then charge in the direction of the archer. Arrows begin zipping by as you deflect them with your shield. There are at least three goblins. You close in on the first goblin and use your shield to knock the creature to the ground. You whip around and catch the second goblin in its torso with the edge of your blade. The third goblin lunges toward you with a short sword. You effortlessly block the attack and drive your sword into the creature. Out of the corner of your eye, you spot a fourth goblin covertly raising its bow. You move toward the creature as it fires an arrow at you, but your shield deflects it. The goblin turns to run, but you get there before it has a chance. With a flash of your sword, the creature crumples to the ground.

Several hours later, you return to Celia carrying the spoils of your venture.

“How did it go?” Celia asks apprehensively, eyeing the severed goblin head in your hand. You give her a big grin and hold up your trophy. Celia looks away.

“I can already feel the present value of my strength approaching its future value!” you claim.

“Well that’s wonderful! I hope you enjoyed it, because from now on, you’ll be recording all the details of your battles in this journal.” She tosses you a little green book.

“Seriously?” you complain, catching the book. It would be green.

“Yes, this will enable you to track your performance, so you can make smarter decisions and reach Master level faster.” Celia tosses you a pencil. “Alright, warrior. Lesson 2. Financial Statements. In accounting, companies produce financial statements to help investors and lenders decide where to put their money. A financial statement is simply a report that states information about a company in terms of dollars or another currency. Imagine having an organized and up-to-date record of your inventory, skills, and other useful data…” As Celia is talking, you’re flipping through the blank green pages in the journal, wondering how in the world you are going to fill them up. Celia crosses her arms. “Hey! Are you listening to anything I’m saying?”

You reply with a yawn, “Yea, yea, I can keep track of my entire inventory. So what?”

“So these records will tell you how you’re performing overall. How else will you or I know if you’re training efficiently and improving? You can only remember so much.”

“I guess you’re right”, you say rubbing your chin. “I do want to get stronger as fast as possible.”

“Good,” Celia replies. “Now there are three main financial statements: balance sheet, income statement, and cash flow statement. Let’s start with the first one. The balance sheet shows the current financial condition of the company at a specific point in time. That’s why it’s also known as the statement of financial position. Think of it as a detailed inventory system that shows everything that you own, anything you’ve borrowed, all your skills, and your overall worth. Pretty neat, huh?”

“Yea, that is kind of cool,” you comment.

“There are three main sections of the balance sheet: assets, liabilities, and owner’s equity. Assets are like your resources. They include anything that is going to have a positive future effect for you. So, for example, your weapons, items, and skills are all assets to you, because they have some future benefit to you. Liabilities are what you owe – all your obligations. For example, let’s say you borrow a wooden bow from one of your warrior friends. Your friend might make you sign a contract agreeing to return his bow later. The contract represents your obligation, or liability. Liabilities have a negative future effect on you (i.e. returning the bow).”

“Hold on,” you interject. “I’m confused. I thought you said weapons were assets. So why is my bow a liability?”

“Great question,” Celia replies. “There is a difference between the bow you receive and your obligation to return the bow. The bow itself is an asset. Your obligation to return that bow, represented by the contract, is a liability. Liabilities have a negative future effect because you have to give up your assets in the future.”

“Okay, I think I understand.”

“It will become clearer over time. Let’s continue to the third and final section of the balance sheet. Owner’s Equity is like your personal value. It’s what is left after you remove everything that you owe to others. Technically speaking, it’s all your assets minus all your liabilities. Successful questing can lead to increases in personal value, or owner’s equity, when you earn experience and gain assets. You’ll see how in the next lesson. For now, you should rest up. We’ve got a journey ahead of us tomorrow.”

*                          *                          *                          *

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Lesson 3: Financial Statements – Part 2

A thick layer of clouds covers the night sky and darkness enshrouds the landscape. All starlight is blotted out; even the moon is unable to penetrate the cloud barrier. The only thing you see is a faint green glow emanating from a source that resembles the shape of Celia. You wipe your eyes groggily and continue trudging behind the moving green glow.

“So, where are we going?” you grumble, loudly clearing your throat.

“Farwood village,” the glow replies. “I’ve got a friend there who can help you on your journey.”

“Oh,” you grunt and continue walking in silence.

An hour passes. Suddenly, the green glow disappears.

“Uh, a little light would be-” you start but Celia shushes you.

“Get down!” she whispers. Immediately, a powerful force knocks you off your feet. You are thrown several yards and hit the ground with a thud. You roll on your side, wincing in pain. Then you hear a terrifying screech that causes the ground to tremble below you. Reflexively, you cover your ears. The intensity of the sound is so powerful that it temporarily paralyzes you. It sounds as if thunder is crashing all around you, and the ground feels like it is going to collapse under you. You wonder if this could be the end of your journey.

Suddenly, the noise vanishes. You lay on the ground in silence. Slowly, you begin to break out of your paralysis. You glance around for the source of the terrible sound, but it’s still pitch black. Then you notice a familiar green glow moving toward you.

“It’s gone. Are you alright?” Celia asks.

“Fine.” you reply quickly. Grimacing, you slowly get on your feet. “What was that?”

“That was your first encounter with an elder dragon.” Celia responds. “It’s an ancient and unbelievably powerful creature. It flies only under the darkest nights making it virtually invisible. It’s nearly impossible to sense until it already has you in its clutches. There is no rival to it on earth in terms of agility and strength.”

“It must have hit me with its tail or something,” you say rubbing your bruised ribs.

Celia chuckles. “That wasn’t its tail. You got hit with the force of its wing beat. It probably wasn’t after us anyway. Otherwise, we’d be dead already.” Your eyes widen, and for the first time, you closely examine your surroundings. It’s still very dark, but you can see some of the damage. Trees lay scattered around, splintered and snapped like twigs. It looks like a tornado passed through the area. “What kind of monster could do this?” you think to yourself.

“Alright, we have to keep moving if we’re going to make it to the next town by morning,” Celia asserts. “I also believe it’s time for your next lesson.”

You knew that was coming sooner or later. You and Celia make your way around the fallen trees and continue along the path.

“So we are picking up from our last discussion about financial statements. The next statement is the income statement. An income statement is a report of a company’s financial performance for a period of time. This is like a summary of your performance on the battlefield over a certain length of time. There are two key sections of the income statement: revenues and expenses. Revenues are increases in the company’s assets from doing business. For example, a weaponsmith is in the business of selling weapons. The weaponsmith earns revenue when he makes money from selling weapons.”

You mumble something about having a headache, and Celia continues.

“As a warrior, your business is doing battle. You earn revenue when you gain treasure and experience as a result of battle. For example, let’s say you defeat a goblin and find 50 gold coins in its pocket. By looting the gold coins from the goblin, you’ve just increased your assets. This increase in assets is called revenue. Remember, the gold coins themselves are assets. Receiving the gold is represented by the revenue.”

Your ears perk up when Celia mentions the word goblin. “Isn’t it enough to say I got more assets when I get the gold? Why should I care about revenue?”

“Good question. When you get more assets such as weapons or treasure, it’s important to know where those assets came from. Did you buy them? Did you find them? Did you slay an insanely powerful creature to get them? Revenue tells you what you’ve received as a result of doing battle. Thus, it will help you determine your performance on the battlefield.”

“So, if I sell the goblin’s head I got, I don’t get any revenue?” you ask with furrowed brows.

“No, but that is a good point,” replies Celia. “Earning the goblin head from a tough battle tells me something about your performance on the battlefield. However, selling the goblin head doesn’t tell me anything about your battle performance.”

“I suppose that’s true,” you remark. You and Celia walk in silence for a few minutes. You notice the sun beginning to peek over the distant hills, and you hear the first chirps from the early-rising birds.

Celia continues as if there had never been a break in the conversation. “Expenses are decreases in the company’s assets from doing business. For example, when the weaponsmith sells weapons from his inventory, his assets decrease. Again, the weapons themselves are assets. The decrease in assets from doing business causes, or incurs, an expense.

Expense is the cost of doing business. When you battle a monster, the damage you take is an expense. The damages to your sword and shield are also expenses. These are the costs of doing battle. You are willing to take this damage in order to gain treasure and experience and thus, earn revenue.”

“I think I understand,” you say, “but it’s still a little fuzzy.”

“It’s okay,” Celia reassures you. “These concepts can be confusing sometimes. Just think of revenue as the benefit of doing business and expense as the cost of doing business. We’re almost done with this lesson. This last piece might go over your head, but I think it’s worth mentioning. Don’t worry if it doesn’t make sense now, because we’ll talk about it in more detail in the future.”

“Okay. I’m ready,” you reply, focusing your mental strength.

“It is important to know if your performance in battle is profitable. If all your revenues combined are greater than all your expenses combined, you are performing profitably. For example, if you are taking little damage from your foes before obliterating them and then reaping large amounts of treasure and experience, you’re likely profitable. However, if all your expenses are greater than your revenues, you are not performing profitably. If you are taking high damage and receiving little or no benefits from the battle, you are probably not profitable.

Revenues and expenses are related to the owner’s equity section of the balance sheet. Remember, owner’s equity is like your personal value. When you’re performing profitably, revenue is greater than expenses. Since the benefits of doing battle (treasure and experience) are greater than the costs of doing battle (damage), you’re increasing your value. If you’re not performing profitably, you’re decreasing your value.”

“Wow,” you say with a dazed look in your eyes.

“I know that is information overload.” Celia empathizes with you. “But it is important to know how to measure your performance on the battlefield. Should you focus on stronger monsters to gain more experience? Should you target monsters that drop more valuable items? Should you focus mainly on avoiding damage during battle? These are the types of questions that the income statement will help you answer.”

You pass through a small forest and come to a grassy hillside.

“The village is just over this hill,” Celia says. “Then you’ll finally be able to make use of that notebook….” Her voice trails off. You look up and see large clouds of dark smoke rising from beyond the hill.

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