Modified IRR Calculator
From the cash flows, a safe (finance) rate and a reinvest rate, compute the modified internal rate of return (MIRR).
Input Data
Results
At a glance:MIRR assumes outflows are financed at a safe rate and inflows are reinvested at a reinvest rate, avoiding IRR's single-rate flaw. MIRR = (FV of inflows at reinvest rate ÷ PV of outflows at safe rate)^(1 ÷ n) − 1, with n the number of periods.
Formula
PV of outflows = sum of |negative flows| ÷ (1 + safe rate)^t.
FV of inflows = sum of positive flows × (1 + reinvest rate)^(n − t).
MIRR = (FV of inflows ÷ PV of outflows)^(1 ÷ n) − 1.
How to Use
- Enter the cash flows (negative = outflow, positive = inflow).
- Enter the safe finance rate and the reinvest rate.
- Enter the number of periods to read the MIRR.
FAQ
How does MIRR differ from IRR?
Traditional IRR assumes every interim cash flow is reinvested at the IRR itself, which is often unrealistic. MIRR instead compounds inflows at the reinvest rate you set and discounts outflows at the finance (safe) rate, giving a result that is usually more conservative and closer to reality.
Why does MIRR usually fall between the finance rate and the reinvest rate?
Because MIRR is driven by both rates: inflows grow at the reinvest rate and outflows are discounted at the finance rate, so the resulting annualised return naturally lands between the two. This also avoids IRR's problem of multiple solutions.
Why can MIRR sometimes not be computed?
If all cash flows are outflows (no positive inflow at all) or there is no outflow, the numerator or denominator of the formula breaks down; in those cases the calculator shows that it cannot be computed.
What finance rate and reinvest rate should I use?
The finance rate reflects the cost of funding the project (borrowing or using capital) — use your actual borrowing rate or weighted average cost of capital; in Hong Kong you might benchmark against the HKMA's prime rate (P) or mortgage rate. The reinvest rate reflects the return you can actually earn by reinvesting the inflows, and is usually set more conservatively than the finance rate, e.g. a steady deposit or bond return. The fact that the two can differ is exactly what makes MIRR more realistic than IRR.
Is a higher MIRR always better?
MIRR is an annualised return, so higher is more attractive, but do not read it alone. It rises as you raise the assumed reinvest rate, so when comparing projects you must use the same finance and reinvest rate assumptions for a fair comparison. Also, MIRR is a ratio and does not show the project's scale; pair it with NPV to capture both return rate and absolute amount.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.