MIRR Calculator — Modified Internal Rate of Return
Our free MIRR calculator computes the Modified Internal Rate of Return for any investment or capital project in seconds. Enter your initial outlay, annual cash flows, financing rate, and reinvestment rate — and get a realistic return figure that fixes the biggest flaw of the standard IRR.
Unlike simple IRR calculators, this tool uses a separate cost of capital (finance rate) and reinvestment rate, so the result reflects what your money can actually earn on redeployment. It handles up to 10 years of mixed positive and negative cash flows.
Quick Answer: What Is a MIRR Calculator?
A MIRR calculatormeasures a project's annualized return while assuming positive cash flows are reinvested at a realistic rate — typically your cost of capital or WACC — rather than at the project's own IRR. The output is one percentage you can compare directly to your hurdle rate.
MIRR = (FV of positive cash flows ÷ PV of negative cash flows)^(1/n) − 1
What Is the Modified Internal Rate of Return?
MIRR improves on IRR by separating the financing cost of negative cash flows from the reinvestment assumption on positive cash flows. IRR implicitly reinvests every dollar at the IRR — often unrealistically high. MIRR replaces that with two explicit inputs:
- Finance rate (FR) — discount rate for negative outflows (cost of debt, WACC, or cost of capital).
- Reinvestment rate (RR) — rate at which positive cash flows compound to the end of the project (often WACC or a conservative market return).
MIRR formula
n= number of periods from start to end. FVcompounds each inflow at RR to the final period. PV discounts each outflow at FR to year 0 (using absolute values of negatives, matching Excel MIRR).
How to Calculate MIRR in 4 Steps
- List every cash flow by year, with outflows negative and inflows positive.
- Compound positive cash flows to year n using the reinvestment rate.
- Discount negative cash flows to year 0 using the finance rate.
- Apply MIRR = (FV ÷ PV)^(1/n) − 1 and express as a percentage.
Worked example (5-year project)
| Time | Cash flow |
|---|---|
| Initial (Year 0) | −$10,000 |
| Year 1 | $6,000 |
| Year 2 | −$4,000 |
| Year 3 | $8,000 |
| Year 4 | $3,000 |
| Year 5 | $7,000 |
Assumptions: FR = 10%, RR = 12%, n = 5. FV of positives ≈ $29,836. PV of negatives ≈ $13,306. MIRR ≈ 17.53%— vs plain IRR ≈ 24.38% on the same flows (use the calculator's IRR reference line to verify).
MIRR vs IRR
| Topic | IRR | MIRR |
|---|---|---|
| Reinvestment assumption | At IRR | At explicit RR (you choose) |
| Finance cost | Implicit | Separate finance rate |
| Multiple solutions | Possible with sign changes | Single solution |
| Realism | Often overstated | Closer to practice |
MIRR approaches
1. Discounting approach — discount negatives to year 0 at FR; positives stay at their dates; solve IRR on the adjusted stream.
2. Reinvestment approach — compound positives to year n at RR; negatives stay; solve IRR on the adjusted stream.
3. Combination approach (standard) — negatives to PV at FR and positives to FV at RR, then MIRR = (FV/PV)^(1/n) − 1. This matches Excel MIRR and most corporate finance textbooks. Our calculator uses this approach.
MIRR calculator with WACC
Many analysts set both FR and RR equal to the firm's WACC. Then MIRR > WACC implies value creation; MIRR < WACC implies destruction. Not sure about WACC? Use our WACC calculator first, then plug the result in here.
MIRR in Excel
Example: =MIRR(A1:A6, 10%, 12%) returns ~17.53% for the worked example above. The range must include at least one positive and one negative cash flow.
How to find MIRR on a BA II Plus
The TI BA II Plus has no dedicated MIRR key. Use cash-flow and TVM keys: (1) Clear the CF worksheet and enter all flows with correct signs. (2) Compute the present value of negative outflows at the finance rate (NPV with I = FR) — magnitude is your PV denominator. (3) Compute the future value of positive inflows at the reinvestment rate to the terminal period. (4) Use TVM: N = project length, PV = negative PV of outflows, FV = FV of inflows, PMT = 0, then CPT I/Y for the annualized rate — that is your MIRR. Our online tool automates these steps.
When to use MIRR vs IRR or NPV
- MIRR — sign changes, long horizons, realistic reinvestment, board-ready hurdle comparison.
- NPV — dollar value created at a known discount rate.
- IRR — quick screen; sanity-check with MIRR for material decisions.
Common mistakes with MIRR
- Using FR = RR without thinking through financing vs reinvestment economics.
- Wrong signs on cash flows (outflows must be negative).
- Omitting the initial investment at year 0.
- Comparing MIRR to IRR instead of to hurdle rate or WACC.
- Ignoring mid-project outflows (they belong in PV at FR).
- Mixing real cash flows with nominal rates inconsistently.
Frequently asked questions
What is MIRR?
MIRR stands for Modified Internal Rate of Return. It is a capital-budgeting metric that measures a project's annualized return while assuming positive cash flows are reinvested at a realistic rate — rather than at the project's own IRR, as standard IRR does.
How do you calculate MIRR?
Use MIRR = (FV of positive cash flows at the reinvestment rate ÷ PV of negative cash flows at the finance rate)^(1/n) − 1. Compound positives forward to the final period, discount negatives to period 0, then apply the formula.
What's the difference between IRR and MIRR?
IRR assumes reinvestment at the IRR itself, which is often unrealistically high. MIRR uses a separate, explicit reinvestment rate (often WACC), so the result is more realistic. MIRR also avoids the multiple-IRR problem when cash flows change sign more than once.
What reinvestment rate should I use for MIRR?
Most analysts use the firm's WACC as the reinvestment rate. Some use the risk-free rate for a more cautious estimate, or the expected return on comparable investments.
What finance rate should I use for MIRR?
Use your cost of debt or WACC — whatever best represents the true cost of financing the project's outflows. If the project is funded from the general capital pool, WACC is typical.
Is a higher MIRR always better?
Higher is generally better only if MIRR exceeds your hurdle rate or WACC. A 15% MIRR creates value if WACC is 9%, but destroys value if WACC is 18%.
Can MIRR be negative?
Yes. If the future value of positive cash flows is less than the present value of negative cash flows, MIRR is negative — the project loses money on a time-adjusted basis.
How is MIRR calculated in Excel?
Use =MIRR(values, finance_rate, reinvest_rate). Include the initial investment as a negative number and all subsequent cash flows in the range. Excel returns a decimal — format as a percentage.
What is the MIRR discounting approach?
The discounting approach discounts only negative cash flows to year 0 at the finance rate, leaves positives at their dates, then solves IRR on the adjusted stream. It is one of three textbook conventions.
What is the MIRR reinvestment approach?
The reinvestment approach compounds only positive cash flows to year n at the reinvestment rate, leaves negatives at their dates, then solves IRR on the adjusted stream.
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Try the MIRR calculator
Load the worked example or enter your own flows. Adjust finance and reinvestment rates to match your capital structure and redeployment assumptions.
↑ Open calculatorThis MIRR calculator is provided for educational and informational purposes only. MIRR is a capital-budgeting aid, not a guarantee of project performance. Always pair MIRR with NPV, sensitivity analysis, and qualitative risk review before material investment decisions.