MIRR Calculator - Modified Internal Return Analysis

Modified internal rate of return (MIRR) is a project-return measure designed to fix two well-known problems with ordinary IRR. IRR assumes that every interim cash inflow is reinvested at the IRR itself, which can be unrealistic, and a project can have more than one IRR when signs change more than once. MIRR uses an explicit finance rate for negative cash flows and an explicit reinvestment rate for positive cash flows, then solves for a single rate that connects the present value of costs to the future value of returns. The calculator parses a chronological list such as -50000, 5000, 15000, 25000, 35000. Period 0 is the first number. Negative amounts are discounted to period 0 at the financing rate: PV of costs = −Σ (CF_t / (1 + f)^t) for CF_t < 0. Positive amounts are compounded to the final period at the reinvestment rate: FV of returns = Σ CF_t × (1 + r)^(N − t) for CF_t > 0, where N is the number of periods after the first date. Then MIRR = (FV / PV)^(1/N) − 1, reported as a percent. That is the standard textbook MIRR. It still needs a complete cash-flow set: an initial investment (negative) and at least one inflow (positive). Leaving out terminal value, taxes, or working-capital recovery will misstate the rate. The finance rate is often a weighted average cost of capital or a borrowing rate; the reinvestment rate is often a conservative rate available on interim cash, not the project’s hoped-for IRR. Enter rates as percents, such as 8 for 8 percent. MIRR is useful when ranking projects, checking a real-estate pro forma, or explaining why a high IRR is sensitive to reinvestment assumptions. It is not a market yield and it does not replace net present value. Two projects with the same MIRR can have very different scale and risk. Use it as a transparent rate that shows your financing and reinvestment hypotheses, then compare NPV, payback, and qualitative risks before funding a project.