The Modified Internal Rate of Return (MIRR) is a powerful financial metric used to evaluate the attractiveness of an investment or project. Unlike the standard Internal Rate of Return (IRR), the MIRR accounts for both:
The financing cost of the investment (how much it costs to borrow money)
The reinvestment rate for positive cash flows (what return you earn on interim profits)
This gives a more realistic view of an investment’s potential compared to IRR, which assumes reinvestment at the IRR itself — often an impractical assumption.
Calculating MIRR manually involves multiple steps, future value calculations, and complex formulas. Our MIRR calculator simplifies this process. Just input:
The initial investment
A series of cash flows
The financing rate
The reinvestment rate
…and get the accurate MIRR instantly.
Input Field | Description |
|---|---|
Initial Investment ($) | The starting cost or outflow for the investment. Usually a negative value. |
Reinvestment Rate (%) | The rate at which cash inflows are assumed to be reinvested. |
Financing Rate (%) | The cost of capital or borrowing rate. |
Number of Cash Flows | Total periods over which the investment returns cash. |
Cash Flows | Enter the actual cash inflows for each period. These should be positive values. |
Handles any number of cash flows – ideal for complex projects
Instant calculations – no spreadsheet formulas needed
Realistic return calculation using both financing and reinvestment assumptions
User-friendly interface with a clean input form and clear results
Reset function to start fresh with new numbers
Helps compare multiple investment options
Avoids the multiple IRR problem of traditional IRR
Provides more financially accurate projections
Commonly used in corporate finance, capital budgeting, and real estate investment analysis
Imagine you invest $1000, with expected returns over 3 years of $300, $400, and $500. You reinvest at 8% and borrow at 10%. Using this calculator, you’ll get the MIRR, which accurately reflects the performance of this investment under real-world financial conditions.
| Feature | IRR | MIRR |
|---|---|---|
| Reinvestment Rate | Assumed same as IRR | User-defined |
| Accuracy | Can be misleading | More realistic |
| Multiple Results | Possible | Only one result |
| Use Cases | Simpler estimates | Professional analysis |
| Considers Financing Cost? | ❌ No | ✅ Yes |
Key Takeaway: IRR is useful for quick estimates, while MIRR is better for in-depth financial decision-making.
Businesses use MIRR to choose between multiple project proposals by evaluating which project delivers the best return after accounting for real-world financing and reinvestment conditions.
Real estate developers use MIRR to project property returns, especially when there are staggered inflows and long-term holding periods.
Startups and venture capitalists evaluate expected MIRR on seed funding and Series A rounds to decide investment viability.
Companies buying expensive equipment with financed capital calculate MIRR to ensure the investment is justified over time.
MIRR is widely used in countries like the United States, United Kingdom, Canada, Australia, and India — especially in the financial, real estate, and tech industries. Many MBA programs and CFA exam prep courses include MIRR as a core concept.
MIRR is a financial metric used to evaluate the profitability of an investment by accounting for both the cost of financing and the reinvestment rate of cash inflows.
Unlike IRR, which assumes cash flows are reinvested at the same rate as the IRR, MIRR uses two separate rates: the financing rate (cost of capital) and the reinvestment rate, making it more realistic.
A positive MIRR indicates that the investment is expected to generate returns above the financing cost, making it a potentially profitable opportunity.
Yes, if the present value of costs exceeds the future value of returns, the MIRR will be negative, signaling an unprofitable investment.
You need the initial investment amount, cash flows over time, reinvestment rate, and financing rate to calculate MIRR accurately.
The financing rate is the cost of capital, such as a loan interest rate or your company's weighted average cost of capital (WACC).
The number of periods determines how long the investment will compound or be discounted, directly influencing the final MIRR value.
MIRR is used by financial analysts, investment managers, real estate developers, corporate strategists, and MBA students to make informed capital budgeting decisions.
Yes, individuals can use MIRR to evaluate long-term investments like rental properties, retirement plans, or business startups.
MIRR is expressed as a percentage rate (%), indicating the expected annual return of the investment.
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