Modified Internal Rate of Return (MIRR) Calculator

Capital Budgeting
Updated Apr 2026 • Has calculator

An improved version of IRR that uses separate rates for financing costs and reinvestment returns.

Calculate MIRR

MIRR Formula

MIRR = (FV_positive ÷ |PV_negative|)^(1/n) − 1

Enter comma-separated cash flows starting at t=0. Negative values are financed; positive values are reinvested. E.g.: -1000, 300, 400, 500, 200

Cost of capital for negative cash flows

Rate at which positive cash flows are reinvested

MIRR

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Not investment advice.

What is MIRR?

Modified Internal Rate of Return (MIRR) fixes two well-known flaws in conventional IRR. First, IRR assumes that positive cash flows are reinvested at the project's own IRR — an unrealistically high assumption for most projects. MIRR instead specifies a realistic reinvestment rate for positive cash flows and a financing rate for negative ones. Second, MIRR always produces a single solution, eliminating the multiple-IRR problem that arises when cash flow signs flip more than once. The result is a more conservative and theoretically sound return metric that is increasingly favoured by CFOs and capital allocators.

Worked Example

Worked example — Capital Project — CFA Curriculum Illustration

Same 5-year project; finance rate 10%, reinvest rate 8%

Step 1  Initial investment: −$500,000; finance rate: 10%; reinvest rate: 8%
Step 2  FV of positive CFs at 8%: $120K×1.08⁴ + $150K×1.08³ + $180K×1.08² + $160K×1.08 + $130K
Step 3  FV_positive ≈ $817,792
Step 4  MIRR = ($817,792 / $500,000)^(1/5) − 1 = 1.6356^0.20 − 1 ≈ 10.32%
Step 5  → MIRR of 10.32% is more conservative than the IRR because reinvestment is at 8%, not IRR

Source: CFA Institute — Corporate Finance, 4th ed., Capital Budgeting (2024-01-01)

How to Interpret MIRR

< 5
Below Risk-Free Rate — very weak return
5 – 10
Below Typical Cost of Capital — marginal project
10 – 20
Attractive — above typical hurdle rates
> 20
Excellent — strong risk-adjusted return

📚 Capital Budgeting — Complete the path

  1. NPV
  2. IRR
  3. MIRR
  4. Payback Period
  5. Discounted Payback
  6. Profitability Index
Sources
  1. CFA Institute — Corporate Finance, 4th ed., Capital Budgeting
  2. Brealey, Myers & Allen — Principles of Corporate Finance, 13th ed., Ch. 6
  3. Investopedia — MIRR