MIRR Calculator

Category: Investment
- October 06, 2025
| |

Modified Internal Rate of Return (MIRR) Calculator

Calculate the Modified Internal Rate of Return (MIRR) for an investment, taking into account different rates for reinvestment of positive cash flows and financing of negative cash flows.

MIRR provides a more realistic measure of an investment's profitability compared to traditional IRR by considering the actual rates at which cash flows are reinvested or financed.

Investment Information

%
Rate at which negative cash flows are financed
%
Rate at which positive cash flows are reinvested

Cash Flows

0
$
1
$
2
$
3
$

Display Options

About Modified Internal Rate of Return (MIRR)

The Modified Internal Rate of Return (MIRR) is a financial measure of an investment's attractiveness. It addresses some limitations of the traditional Internal Rate of Return (IRR) by explicitly considering the reinvestment rate of positive cash flows and the finance rate of negative cash flows.

Advantages of MIRR over IRR
  • Realistic Reinvestment Assumption: IRR assumes all cash flows are reinvested at the IRR itself, which may be unrealistic. MIRR allows you to specify a more realistic reinvestment rate.
  • Avoids Multiple IRR Problem: Traditional IRR can sometimes yield multiple valid rates for the same cash flow series. MIRR always provides a single, unique solution.
  • Financing Cost Consideration: MIRR accounts for the cost of financing negative cash flows, making it more realistic for real-world scenarios.
  • Better for Comparing Investments: MIRR often provides a more accurate basis for comparing mutually exclusive investment opportunities.
When to Use MIRR
  • When evaluating long-term capital investment projects
  • When comparing multiple investment opportunities
  • When cash flow patterns include both positive and negative values after the initial investment
  • When you have specific reinvestment or financing rates that differ from the project's internal return
  • When traditional IRR analysis yields multiple rates or unrealistic results

Understanding the MIRR Calculator

The Modified Internal Rate of Return (MIRR) Calculator helps you assess the profitability of an Investment. It takes into account two different rates: one for how you Finance your negative cash flows and another for how you reinvest your positive cash flows. This gives a clearer picture of an investment's potential compared to the traditional Internal Rate of Return (IRR).

Why Choose MIRR Over Traditional IRR?

Using MIRR has several advantages. It offers a more realistic view of your investment's return by addressing some flaws of the traditional IRR method. Here are some key benefits:

  • MIRR uses a realistic reinvestment rate instead of the IRR rate.
  • It avoids situations where multiple IRR values can confuse decision-making.
  • MIRR considers the costs of financing negative cash flows.
  • This measure is better for comparing different investment options.

How the Calculator Works

The MIRR Calculator requires you to input key data about your investment. You’ll enter your finance rate, reinvestment rate, and your cash flows over time. From this data, the calculator computes the MIRR and compares it with the traditional IRR, giving you a comprehensive overview of your investment’s performance.

Investment Inputs Explained

When using the MIRR Calculator, you’ll need to provide specific details. This includes your finance and reinvestment rates. The finance rate is where you borrow money, while the reinvestment rate is what you earn on your positive cash flows. Accurate rates lead to better results, so be sure to choose wisely.

Understanding Cash Flows

Cash flows are critical in calculating MIRR. You will enter your initial investment followed by the cash flows for each subsequent year. It’s important to accurately reflect both positive and negative cash flows to get precise results. This aspect allows you to visualise how your investment performs over time.

Customizing Your Experience

The calculator also offers display options to tailor your experience. You can choose how many decimal places to show in the results. Plus, there are options to see calculation steps and compare MIRR with the traditional IRR. This makes it easier to understand how the figures are derived and interpret the results effectively.

Results and Visualisation

Once you’ve entered all necessary data, the MIRR Calculator provides results in an easy-to-read format. You’ll see your MIRR along with a comparison to the traditional IRR. Additionally, the tool can visualise cash flows through graphs, making it simpler to grasp the performance of your investment at a glance.

When to Use the MIRR Calculator

The MIRR Calculator is ideal for various scenarios, such as:

  • Evaluating long-term capital investment projects.
  • Comparing multiple investment opportunities.
  • Handling cash flows that mix positive and negative values.
  • Using specific reinvestment rates that differ from the project's return.
  • Addressing cases where traditional IRR yields multiple rates.