IRR assumes every cash flow is reinvested at the IRR itself, which overstates attractive projects. MIRR fixes this by using your actual reinvestment and borrowing rates, and always gives a single answer.
How to use the MIRR Calculator – Modified Internal Rate of Return
- Finance rate
- Reinvestment rate
- Initial investment
- Cash flows for year 1, 2, 3 …
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the finance rate, the reinvestment rate, the initial investment and the yearly cash flows.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| Finance rate | In % |
| Reinvestment rate | In % |
| Initial investment | Amount in your currency |
| Cash flows for year 1, 2, 3 … | A list of numbers separated by commas, spaces or new lines |
What each result means
- Modified internal rate of return (MIRR) = [Modified internal rate of return (MIRR)]([Finance rate]÷100, [Reinvestment rate]÷100, 0 – [Initial investment], [Cash flows for year 1, 2, 3 …])×100
- IRR for comparison = [IRR for comparison](0 – [Initial investment], [Cash flows for year 1, 2, 3 …])×100
- NPV at the finance rate = [NPV at the finance rate]([Finance rate]÷100, [Cash flows for year 1, 2, 3 …]) – [Initial investment]
Example values
How the main result changes when Finance rate changes and everything else stays at the example values above:
| Finance rate (%) | Modified internal rate of return (MIRR) (%) |
|---|---|
| 4 | 12.264 |
| 6 | 12.264 |
| 8 | 12.264 |
| 10 | 12.264 |
| 12 | 12.264 |
| 16 | 12.264 |
Formula
MIRR = (FV of positive cash flows at reinvestment rate ÷ PV of negative cash flows at finance rate)^(1 ÷ n) − 1Worked example
Inputs — Finance rate: 8 %; Reinvestment rate: 6 %; Initial investment: $10,000; Cash flows for year 1, 2, 3 …: 2000, 3000, 4000, 4000, 3000.
Results — Modified internal rate of return (MIRR) = 12.264 %; IRR for comparison = 16.605 %; NPV at the finance rate = $2,581.07.
Frequently asked questions
Why use MIRR instead of IRR?
MIRR uses realistic reinvestment rates and gives a unique answer.
What reinvestment rate should I use?
Often the firm's cost of capital or a realistic return on spare cash.
Is MIRR always lower than IRR?
Usually, when the reinvestment rate is below the IRR.
What formula does the MIRR Calculator – Modified Internal Rate of Return use?
MIRR = (FV of positive cash flows at reinvestment rate ÷ PV of negative cash flows at finance rate)^(1 ÷ n) − 1.