π Modified IRR Calculator
MIRR with separate finance and reinvestment rates.
Modified internal rate of return
Estimates for planning only, not financial advice.
Modified IRR fixes the two lies inside regular IRR: that interim cash flows reinvest at the project's own high rate, and that weird cash flow patterns get one clean answer. MIRR discounts costs at the finance rate, compounds inflows at an explicit reinvestment rate, then solves for the rate connecting them. For cash flows of -10000, 3000, 4000, 5000, 6000 with 6 percent finance and 8 percent reinvestment rates, MIRR is about 18.7 percent. This calculator runs the full method on your series.
The reinvestment assumption is where project pitches quietly inflate. A project showing 28 percent IRR usually assumes every dollar thrown off gets reinvested at 28 percent, which no business can do. MIRR forces the honest rate into the open.
How to Use This Calculator
Enter cash flows comma-separated with period 0 first, then the finance rate and reinvestment rate. The calculator shows MIRR plus the present value of costs and future value of inflows.
Enter the cash flow series, negatives for investments and costs, positives for inflows.
Enter the finance rate (cost of capital) and a realistic reinvestment rate.
Read MIRR against your hurdle rate. For the plain IRR comparison, our IRR calculator shows the unadjusted figure.
The Formula
Collapsing each side to a single number is what kills the multiple-solutions problem: with one outflow value and one inflow value there is exactly one connecting rate. The finance rate prices the investment phase honestly, and the reinvestment rate prices the harvest phase at something achievable.
MIRR Versus IRR
| IRR | MIRR | |
|---|---|---|
| Reinvestment assumption | At the IRR itself | At your stated rate |
| Multiple solutions | Possible | Never |
| Typical result | Higher, flattering | Lower, realistic |
| Best use | Quick hurdle check | Ranking projects, presentations |
The ranking row is where MIRR earns its keep. Two mutually exclusive projects can flip order between IRR and MIRR because IRR's hidden reinvestment assumption favors the project with earlier, larger interim flows. When capital is constrained and only one project gets funded, rank by MIRR or NPV, not IRR. For payback-style thinking alongside, our payback period calculator adds the time dimension.
Worked Example
With the defaults: cash flows -10000, 3000, 4000, 5000, 6000 over 4 periods, finance rate 6 percent, reinvestment rate 8 percent. PV of costs is $10,000. FV of inflows: 3000 x 1.08^3 + 4000 x 1.08^2 + 5000 x 1.08 + 6000 = 3,779 + 4,666 + 5,400 + 6,000 = $19,845. MIRR is (19,845 / 10,000)^(1/4) - 1 = 18.69 percent. A plain IRR on the same series would print higher by assuming those interim inflows reinvest at the IRR itself, which is the optimism MIRR removes.
Choosing the Rates
Finance rate: the project's cost of capital or your required return, the honest price of funding the outflows. Reinvestment rate: what interim cash can actually earn, often the cost of capital or a conservative portfolio return. Run the calculation at two reinvestment rates to see the sensitivity; if the decision flips between reasonable assumptions, the project is marginal and the model is telling you so.
My rule: never present an IRR without its MIRR beside it. The gap between them measures the optimism in the reinvestment assumption, and decision-makers deserve to see exactly how much optimism they are buying.
When MIRR Changes the Decision
MIRR flips project rankings most often when cash flows are lumpy and early. A project with huge early inflows looks stellar under IRR because the method assumes those inflows reinvest at the same stellar rate; MIRR's realistic reinvestment rate deflates it. Capital-intensive projects with heavy early outflows see less change, since the finance-rate adjustment is usually close to the discount rate anyway.
Set the rates deliberately. The finance rate should be your actual cost of capital, the WACC or the borrowing rate for the project. The reinvestment rate should be what surplus cash really earns: the company's average project return, a hurdle rate, or a conservative market return. Document both, because MIRR's credibility comes from explicit assumptions, unlike IRR's hidden one. When presenting to non-finance stakeholders, show both metrics and explain the gap; the conversation it starts is more valuable than either number. For the payback view of the same project, our payback period calculator adds the liquidity lens.
MIRR for Personal Investing
Individuals can use MIRR thinking too. If you project a rental property's cash flows, the classic IRR assumes you reinvest each year's cash at the property's own return, optimistic. Recomputing with a realistic reinvestment rate, say 7 percent in index funds, gives an MIRR-style figure that better predicts your actual wealth.
The same applies to business investments and even career moves: the value of early cash depends on what you actually do with it. Conservative reinvestment assumptions keep projections honest and prevent the planning fallacy of assuming every dollar compounds at the project's best rate.
Estimates for planning only, not financial advice.Frequently Asked Questions
What is Modified IRR (MIRR)?
The internal rate of return computed with realistic assumptions: negative cash flows are discounted at the finance rate (cost of capital) and positive cash flows compound at the reinvestment rate, then the rate equating the two is solved. It fixes IRR's fantasy that interim cash flows reinvest at the IRR itself.
How do you calculate MIRR?
Three steps: discount all negative cash flows to present value at the finance rate, compound all positive cash flows to the final period at the reinvestment rate, then find the rate r where PV of costs x (1+r)^n equals FV of inflows. With -10000, 3000, 4000, 5000, 6000 at 6 percent finance and 8 percent reinvestment, MIRR is about 18.7 percent.
What is the difference between IRR and MIRR?
IRR assumes cash flows reinvest at the IRR, which inflates the result for high-return projects, and it can produce multiple answers with unconventional cash flows. MIRR uses explicit, defensible rates for financing and reinvestment, always gives one answer, and usually lands lower and more honest than IRR.
When should I use MIRR instead of IRR?
Whenever interim cash flows are large relative to the investment, when comparing mutually exclusive projects, and when presenting to anyone who will ask what reinvestment rate was assumed. MIRR is the better ranking tool; IRR remains fine for a quick accept-or-reject against a hurdle rate.
What finance rate should I use?
The project's cost of capital: the WACC for corporate projects or your required return as an investor. It represents what it costs to fund the negative cash flows. Using too low a finance rate understates the true cost of the investment phase.
What reinvestment rate should I use?
A realistic rate for redeploying interim cash: often the cost of capital, a conservative market return, or the firm's historical reinvestment return. The key is that it is stated explicitly. Sensitivity-test it, since the MIRR moves with this assumption.
Can MIRR be negative?
Yes, when the future value of inflows cannot cover the present value of costs even before discounting, the project destroys value. A negative MIRR is an unambiguous reject, clearer than a negative NPV to non-finance audiences because it speaks in the language of returns.
Does MIRR have the multiple-solutions problem?
No. Because all negatives collapse to one present value and all positives to one future value, there is exactly one rate connecting them. Unconventional cash flows with many sign changes, which can give IRR several answers or none, produce a single clean MIRR.
How does MIRR relate to NPV?
They usually agree on accept or reject: positive NPV at the finance rate corresponds to MIRR above the finance rate. For ranking mutually exclusive projects they can disagree, and NPV is the theoretically preferred measure since it values absolute wealth creation, while MIRR is the better communication tool.
What are MIRR's limitations?
It still depends on the chosen finance and reinvestment rates, it ignores project scale, and it assumes all interim cash can actually be reinvested at the stated rate. Like every single-number metric, it summarizes a cash flow story that deserves reading in full before big decisions.