FinCalcs

MIRR Calculator — Modified Internal Rate of Return

Who this is for: For corporate finance students covering the MIRR chapter — and for anyone who suspects a 40% IRR is mostly reinvestment fantasy and wants the defensible number for a memo.

Not the right tool for: Splitting finance and reinvestment into two different rates — this page applies one rate to both roles · Deciding accept/reject on its own — MIRR is a corrected return metric; NPV still settles value

Modified internal rate of return: reinvests inflows at a rate you choose instead of the IRR — the conservative fix for IRR's optimism.

Quick answer: MIRR = (FV of positive flows at the reinvestment rate ÷ |PV of negative flows at the finance rate|)^(1/n) − 1. On −$1,000, $500, $600, $700 at 8% for both, MIRR is 24.53% versus a 33.87% IRR — the honest version, because mid-project cash can't realistically be reinvested at 33.87%.

Cash flows (CF0 first — outflows negative)
NPV
$533.05
discounted at 8% per period
IRR
33.87%
rate where NPV = 0
MIRR
24.53%
reinvested at 8%
Payback
1.83 periods
undiscounted cumulative
Discounted payback
2.04 periods
at 8% per period
Total inflows
$1,800.00
undiscounted sum of positive flows
PeriodCash flowDiscountedCumulative (discounted)
0 (today)-$1,000.00-$1,000.00-$1,000.00
1$500.00$462.96-$537.04
2$600.00$514.40-$22.63
3$700.00$555.68$533.05
MIRR here applies your discount rate as both the finance rate and the reinvestment rate. IRR shows “no solution” when the stream never crosses zero (all-positive or all-negative flows). Deciding between two projects? Read the NPV vs IRR guide before trusting IRR alone.
Cash flows entered per period (year, month — your choice, kept consistent). CF0 is day zero and is not discounted. Educational reference, not investment advice.
Core facts
FormulaMIRR = (FV₊/|PV₋|)^(1/n) − 1
Worked example−$1,000; $500, $600, $700 @ 8% both rates → MIRR 24.53% (IRR: 33.87%)
Rates usedPage discount rate applied as both finance and reinvestment rate
CompiledOctober 2026

What MIRR changes about IRR

MIRR keeps IRR's idea — one compound rate describing the stream — but fixes its weakest assumption. All negative flows are discounted to day zero at the finance rate (what it costs you to fund the gaps), all positive flows are compounded to the end at the reinvestment rate (what you can actually earn on the proceeds), and MIRR is the single rate connecting the two: MIRR = (FV of inflows / |PV of outflows|)^(1/n) − 1. Example: −$1,000, then $500, $600, $700, with everything at 8%: the inflows compound to $1,931.20, so MIRR = 24.53% — below the 33.87% IRR, because you can't actually reinvest $500 mid-project at 33.87%. MIRR is also unique: no matter how many times the stream changes sign, there is exactly one MIRR, which kills the multiple-IRR problem.

Common uses

  • De-flating a headline IRR before it goes in a memo or case write-up
  • Capital-budgeting homework that specifies finance and reinvestment rates
  • Comparing projects with different cash flow timing on equal footing
  • Resolving the multiple-IRR ambiguity on sign-flipping streams

Where these numbers come from

All results are computed in your browser from the standard closed-form formulas (and a numerical root-finder where no closed form exists — rates, IRR, YTM). Formulas follow the ordinary-annuity (END) convention used by the BA II Plus and HP 12C. Educational reference only — not investment, tax, or accounting advice.

Frequently Asked Questions

Why is MIRR always below IRR here?
When the reinvestment rate is below the IRR (the normal case), the intermediate cash flows earn less than IRR assumed, dragging the modified return down. If you set both rates above the IRR, MIRR can exceed IRR — the numbers move with your assumptions, which is the point.
What finance and reinvestment rates should I use?
Finance rate: your cost of capital (WACC). Reinvestment rate: what you'd realistically earn on freed-up cash — often the same WACC, sometimes a conservative short-term rate. Many textbook problems simply say 'use 10% for both.'
Does MIRR fix the multiple-IRR problem?
Yes. By lumping all negatives into one PV at day zero and all positives into one FV at the end, MIRR produces a single rate no matter how many times the cash flow stream changes sign. That's one of its two selling points, alongside the realistic reinvestment assumption.
Is MIRR accepted in exams and practice?
It's standard in the corporate finance curriculum (it's in the CFA material as a comparison to IRR) and common in practice as a sanity check. Decisions in most organizations are still framed on NPV, with IRR/MIRR as supporting numbers.
Does this calculator use my discount rate for both?
Yes — the discount rate field feeds the finance rate and the reinvestment rate. They're the same by default; if your problem splits them, use the rate that the course specifies for reinvestment, or run both variants and report the range.

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