Modified IRR Calculator (MIRR) — Investment Return with Reinvestment Rate
Compute the Modified Internal Rate of Return (MIRR) for a series of cash flows. Unlike plain IRR, MIRR uses a separate reinvestment rate for positive cash flows and a finance rate for negative ones — giving a single, more realistic return figure.
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MIRR > 0 — investment returns more than the finance rate, given reinvestment assumptions.
- 1
FV of positive cash flows
16,833Each positive cash flow compounded forward to period n at the reinvestment rate. - 2
PV of negative cash flows
10,000Each negative cash flow discounted to period 0 at the finance rate. - 3
FV⁺ ÷ PV⁻ ratio
16,833 ÷ 10,000 = 1.6833 - 4
MIRR
1.6833^(1 ÷ 4) − 1 = 13.90Taking the nth root gives the equivalent per-period return expressed as a percentage.
How does this calculator work?
MIRR = (FV of positive cash flows at reinvestment rate ÷ PV of negative cash flows at finance rate)^(1/n) − 1. Unlike IRR, it avoids unrealistic reinvestment assumptions and always gives a single answer. MIRR > financing rate means the project clears its hurdle; a common setup is WACC as the finance rate and expected market return as the reinvestment rate.
Formula
How this is calculated
The standard Internal Rate of Return (IRR) is the discount rate at which an investment's net present value equals zero. It is widely used but has two known problems: it implicitly assumes that all positive interim cash flows are reinvested at the IRR itself (which may be far higher than realistic market rates), and multiple sign-changes in cash flows can produce multiple IRR values.
MIRR corrects both issues by requiring you to specify two separate rates: a finance rate (your cost of borrowing or cost of capital) applied to negative cash flows, and a reinvestment rate (what you expect to earn on reinvested proceeds) applied to positive cash flows. All negative cash flows are discounted to period 0 at the finance rate, giving PV⁻. All positive cash flows are compounded forward to the last period at the reinvestment rate, giving FV⁺. The MIRR is then the single equivalent rate that equates these two quantities: MIRR = (FV⁺/PV⁻)^(1/n) − 1.
Because the formula always has exactly one positive root (provided there is at least one negative and one positive cash flow), MIRR is free from the multiple-roots problem. A reasonable rule of thumb is to use the firm's WACC for the finance rate and a conservative market return (e.g. 8–12%) for the reinvestment rate. MIRR below zero means the investment fails to recover financing costs under the stated assumptions.
Frequently asked questions
Use MIRR when (1) you have multiple sign-changes in cash flows (which can give IRR multiple solutions), (2) interim cash flows will realistically be reinvested at a rate significantly different from the project's own IRR, or (3) you want a single unambiguous return figure for comparing investments of similar scale.
A common choice is the firm's cost of capital (WACC) or an expected market return on low-risk reinvestment (e.g. a money-market or bond rate). Using the same rate for both reinvestment and finance gives a result closer to IRR but avoids its multiple-roots problem.
NPV gives the absolute value created (in currency), while MIRR gives a percentage return. NPV is generally preferred for accept/reject decisions because it reflects scale; MIRR is useful for ranking projects or comparing with hurdle rates. Both measures can disagree on ranking when projects have different scales or timing.
Also known as
TG we-Calculate Editorial Team. (2026). Modified IRR Calculator (MIRR) — Investment Return with Reinvestment Rate [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/modified-irr-calculator
TG we-Calculate Editorial Team. "Modified IRR Calculator (MIRR) — Investment Return with Reinvestment Rate." TG we-Calculate. 2026. https://we-calculate.com/calculator/modified-irr-calculator.
TG we-Calculate Editorial Team, "Modified IRR Calculator (MIRR) — Investment Return with Reinvestment Rate," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/modified-irr-calculator
@misc{wecalculate_modified_irr_calculator, title = {Modified IRR Calculator (MIRR) — Investment Return with Reinvestment Rate}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/modified-irr-calculator}}, year = {2026}, note = {TG we-Calculate} }
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