Modified Internal Rate of Return Calculator

About this calculator

The Modified Internal Rate of Return (MIRR) fixes a well-known weakness of the plain IRR (Internal Rate of Return): standard IRR implicitly assumes that all interim cash flows are reinvested at the same rate as the project's own IRR, which is often unrealistic — a project with a 30% IRR is unlikely to have other opportunities also paying 30%. MIRR instead lets you specify a separate finance rate (the cost of the capital used to fund the investment) and reinvestment rate (a realistic rate, such as a money-market or portfolio return, at which interim cash flows can actually be reinvested), then compounds cash flows forward at the reinvestment rate and discounts the initial outlay back at the finance rate to solve for a single rate of return.

Corporate finance teams, capital-budgeting analysts, and private-equity professionals use MIRR alongside NPV (Net Present Value) when comparing mutually exclusive investment projects, because MIRR also avoids IRR's mathematical quirk of producing multiple or no real solutions when a project's cash flows change sign more than once (for example, a large cash outflow midway through a project). A single, unambiguous MIRR value makes it easier to rank competing projects on a like-for-like basis.

This calculator takes your initial investment, a uniform annual cash flow, the number of years, and your finance and reinvestment rates, and returns the MIRR so you can evaluate the investment under a more realistic reinvestment assumption than plain IRR provides.