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Modified Internal Rate of Return Calculator

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Your Results

This project's modified internal rate of return is 12.11% a year. It costs $1,000.00 today, and the cash coming in, reinvested at 10%, grows to $1,579.50 by year 4. The ordinary IRR is 14.49%, which assumes each cash flow can be reinvested at that same rate. MIRR uses your own rate, so it's usually the more realistic of the two.

12.11%
Modified internal rate of return, per year
14.49%
IRR
$1,579.50
Value at the End
$1,000.00
Cost Today
$579.50
Total Gain

Growth to the end, by year received

Rates compared

Reinvestment rate10%
MIRR12.11%
IRR14.49%

See the ordinary return: IRR. See how long it takes: Payback Period or Discounted Payback.

Cash Flow Table
YearCash FlowRatePV of CostsFV of Cash In
0-$1,000.00-$1,000–$1,000.00$1,000–
1$500.00$50010%–$665.50$666
2$400.00$40010%–$484.00$484
3$300.00$30010%–$330.00$330
4$100.00$10010%–$100.00$100
Total––$1,000.00$1,000$1,579.50$1,580

Each year's Rate is the reinvestment rate for cash in, or the financing rate for a cost. MIRR comes from the two totals.

What Is the Modified Internal Rate of Return?

The modified internal rate of return (MIRR) is a project's yearly return, based on rates you choose. It fixes two weaknesses of the ordinary internal rate of return (IRR):

  • A more realistic reinvestment rate: IRR assumes each cash flow can be reinvested at the IRR itself, which often overstates the return. MIRR uses a reinvestment rate you set, usually your cost of capital.
  • Only one answer: when cash flows change between positive and negative more than once, IRR can have several answers. MIRR has just one.

When a project's return is above the reinvestment rate, its MIRR falls between that rate and the IRR.

Which calculator should I use?

How to Calculate the Modified Internal Rate of Return

Grow every cash inflow to the last year at the reinvestment rate, discount every cost to today at the financing rate, then compare the two:

MIRR= (Value at the endCost today) 1/n −1
  • Value at the end: each cash inflow × (1 + reinvestment rate)years left until year n, added up.
  • Cost today: the investment, plus each later cost ÷ (1 + financing rate)its year.
  • n: the number of years.

Example

A $1,000 investment with cash flows of $500, $400, $300 and $100, and a 10% reinvestment rate:

  • Value at the end: $500 × 1.103 + $400 × 1.102 + $300 × 1.10 + $100 = $1,579.50
  • Cost today: $1,000.00. No later year is negative, so the financing rate isn't used.
  • MIRR: ($1,579.50 ÷ $1,000.00)1/4 − 1 = 12.11%
  • The ordinary IRR is 14.49%. MIRR is lower because the cash earns 10% rather than the IRR.

How to Use the Modified Internal Rate of Return Calculator

"If I invest $1,000, get back $500, $400, $300 and $100 over four years, and can reinvest that cash at 10%, what return am I really earning?" This calculator answers that.

Let's enter the numbers for this example in each box. They are already filled in when the calculator opens, so you can follow along and then change any box to match your own project.

  • Initial Investment: Enter 1,000, which is what you pay at the start. Enter a positive number; the calculator treats it as money going out.
  • Reinvestment Rate: Enter 10, which is the yearly return you expect on the cash the project pays you. It must be from 0 to 99.99.
  • Financing Rate: Leave it at 7.15, which is the yearly cost of borrowing to pay for later costs. The box stays off until a year's cash flow is negative. It must be from 0 to 99.99.
  • Number of Years: Choose 4, which is how many years of cash flows you have, from 1 to 12.
  • Year 1 to Year 4: Enter 500, 400, 300 and 100, which is the cash you receive each year. A year can be negative if the project costs you money that year.

Calculate and Reset

Click Calculate to see your results. If a box has a problem, such as an investment of 0, a message pops up under that box instead. With the default numbers you get:

  • Your Results: a short summary in words: the MIRR (12.11%), the cost and the value at the end, and how it compares with IRR.
  • Modified Internal Rate of Return: the headline number. If no cash comes in, there's no MIRR, and it says so.
  • IRR, Value at the End, Cost Today and Total Gain: 14.49%, $1,579.50, $1,000.00 and $579.50.
  • Growth chart: a bar for each year's cash, showing what reinvesting adds by the last year.
  • Rates compared: bars for the reinvestment rate, MIRR and IRR. Links under them open the IRR, Payback Period and Discounted Payback calculators with your numbers filled in.
  • Cash Flow Table: each year's cash flow, the rate it uses, and its present value (costs) or future value (cash in), with totals. Download Excel saves it with the formulas, so you can change a number and see the MIRR update.
  • Share Results: a link that opens this calculator with your numbers filled in. Copy it, or share it on Facebook or X.

Amounts of $1 million or more are shortened, for example $1.25M. Click Reset to put every box back to its default and show the default results again.

Video: How to Use the Modified Internal Rate of Return Calculator