30 Days of 3.0 – Day 8: Compounding
Welcome to Day 8, and the start of the second week of our “30 Days of 3.0” series. Last week, we focused on the changes we made to how we generate and calculate leases. This week, we’re going to spend most of our time talking about changes to the different ledgers, and how they affect measuring other aspects of the income and expenses.
Today, however, we’re going to talk about a change that affects all of our currency calculations, from leases to ledgers: compounding.
If you’re not up on compounding, Investopedia has a great rundown. In prior versions, we calculated our compounds on an annual basis. Meaning, whether the lease was 12 or 18 months long, the next lease’s rent was the same amount.
But the market works differently than that. A lease that starts 19 months after the current one will definitely have a different price than a lease that starts 13 months after. So when we rewrote the system, we took the opportunity to add month-level granularity to our compounding intervals. So the percentage still compounds annually, but the interval is calculated monthly. This brings a much higher degree of accuracy to our results across the board.
Tomorrow, we’re going to talk about a new way to control when expenses are applied. I’ll see you then, and as always, I hope you have a wonderful day! :)