Calculate MIRR from project cash flows with separate finance and reinvestment rates, terminal inflow value, present-value outflows, and finance-rate spread.
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Model MIRR with separate financing and reinvestment assumptions Enter the project cash-flow series, financing cost for negative cash flows, and reinvestment rate for positive cash flows. The calculator returns modified internal rate of return, finance-rate spread, terminal inflow value, and the present value of outflows.
Scenario presets
Display currency
Switch the display currency used for cash-flow totals before entering the project cash-flow series. The currency changes labels and formatting, not the MIRR calculation.
Assumptions
Cash flows are assumed to occur at evenly spaced period ends in the order entered. MIRR requires at least one negative outflow and one positive inflow; the finance and reinvestment rates must both be greater than -100%.
Result
14.4%
Modified Internal Rate of Return across 4 periods, using 8% to discount outflows and 10% to compound inflows.
Spread vs finance rate
6.4 pts
Terminal inflow value
$171,280.00
PV of outflows
$100,000.00
Terminal value multiple
1.71x
MIRR clears the financing hurdle The project earns 6.4 percentage points above the entered finance rate. Compare this with NPV and project scale before ranking alternatives.
Cash-flow interpretation
The entered series has 1 outflow period and 4 inflow periods. Undiscounted net cash flow is $50,000.00, but MIRR uses discounted outflows and compounded inflows to avoid assuming reinvestment at the IRR itself.
MIRR calculator: Modified Internal Rate of Return with separate finance and reinvestment
Use this MIRR calculator to calculate modified internal rate of return from a project cash-flow series with separate finance and reinvestment rates. MIRR addresses a key flaw in traditional IRR by using realistic assumptions for financing costs and reinvested cash inflows, producing a single return measure for project evaluation.
What MIRR fixes
Traditional IRR assumes all intermediate cash flows are reinvested at the IRR itself, which is often unrealistic. A project with a 50% IRR does not mean you can reinvest interim cash at 50%.
MIRR separates the cost of financing negative cash flows, usually the company's cost of capital or borrowing rate, from the return earned by reinvesting positive cash flows at a realistic reinvestment rate. That makes the modified internal rate of return more conservative and more practical for comparing projects.
The advantage is especially useful when cash flows change sign more than once. A conventional IRR calculation can produce confusing or multiple answers for non-conventional projects, while MIRR converts outflows to a present value and inflows to a terminal value before solving one equivalent periodic return.
How the MIRR formula works
MIRR combines the terminal value of inflows with the present value of outflows. Positive cash flows are compounded forward to the final period at the reinvestment rate, while negative cash flows are discounted back to the starting period at the finance rate.
The calculator then asks what constant periodic return would grow the present value of outflows into the terminal value of inflows over the project life. That is the modified internal rate of return.
MIRR = (FV of inflows / |PV of outflows|)^(1/n) - 1
Inflows are compounded forward at the reinvestment rate. Outflows are discounted back at the finance rate. n is the number of periods between the first and final cash flow.
Each negative cash flow is discounted to period zero using the financing or cost-of-capital assumption.
Worked example
Cash flows: -100,000, 30,000, 35,000, 40,000, 45,000. Finance rate 8%, reinvestment rate 10%. FV of inflows at 10%: 30,000 x 1.1^3 + 35,000 x 1.1^2 + 40,000 x 1.1 + 45,000. PV of outflows at 8%: 100,000. MIRR = (FV / 100,000)^(1/4) - 1.
The page table shows the same logic period by period. Outflows contribute to the present value side, inflows contribute to terminal value, and the headline MIRR shows the equivalent annualized project return under those assumptions.
Choosing finance and reinvestment rates
The finance rate should reflect the cost of funding negative cash flows. For a business project, that might be the weighted average cost of capital, a borrowing rate, or a hurdle rate used by the capital committee. For an investment analysis, it may be the opportunity cost of tying up cash.
The reinvestment rate should reflect what interim receipts can realistically earn until the final period. A conservative reinvestment rate often produces a more decision-useful MIRR than assuming cash can be reinvested at the project's own IRR.
When the project is sensitive to either rate, run multiple scenarios. If the MIRR only clears the hurdle under aggressive reinvestment assumptions, the investment may be less robust than the headline rate suggests.
MIRR vs IRR and NPV
MIRR vs IRR is mostly a question of assumptions. IRR solves for the discount rate that sets NPV to zero, but it also implies reinvestment at that solved rate. MIRR lets you enter a separate finance rate and reinvestment rate, so the return is often more realistic for capital budgeting.
MIRR should still be read beside NPV. NPV tells you how much present-value surplus a project creates, while MIRR expresses a rate of return. A smaller project can show a high MIRR but create less total value than a larger project with a lower rate.
For mutually exclusive projects, use MIRR as a cleaned-up rate comparison and NPV as the primary value-creation check. The strongest decision is usually the one that clears the required return and creates the largest risk-adjusted surplus.
Interpreting the result
A MIRR above the finance rate means the terminal value of the inflows grows faster than the discounted cost of the outflows under the assumptions entered. A MIRR below the finance rate means the project does not clear that financing hurdle.
The spread versus finance rate is often easier to use than the raw MIRR alone. A 12% MIRR with an 8% finance rate has a four-point cushion; the same 12% MIRR with an 11.5% finance rate has very little margin for forecast error.
The terminal value multiple compares compounded inflows with discounted outflows. It helps explain why two projects with similar MIRR percentages can still differ in scale, timing, and total cash returned.
Limitations
MIRR still requires assumptions about finance and reinvestment rates. If those assumptions are unrealistic, the result will be misleading even though the formula is mechanically correct.
The calculator assumes evenly spaced periodic cash flows and does not model taxes, inflation, fees, financing covenants, residual value uncertainty, or changing rates by period. Use an XIRR or dated cash-flow model when timing is irregular.
The single-rate output can mask the timing and magnitude of cash flows. For a full decision, compare MIRR with NPV, payback period, risk, capital constraints, and qualitative strategic fit.
Frequently asked questions
When should I use MIRR instead of IRR?
Use MIRR when the project's IRR significantly exceeds realistic reinvestment rates, when comparing projects of different sizes or durations, or when cash-flow patterns produce multiple IRR solutions.
What rates should I use?
Finance rate is typically your WACC, borrowing cost, or financing hurdle for negative cash flows. Reinvestment rate is the return you can realistically earn on interim positive cash flows, often a conservative portfolio return, WACC, or money market assumption.
Is MIRR always lower than IRR?
Usually, but not always. MIRR is often lower because it uses a realistic reinvestment rate rather than assuming interim cash flows can be reinvested at the IRR. If the reinvestment rate is high or the cash-flow timing is unusual, the relationship can differ.
Can MIRR be negative?
Yes. A negative MIRR means the compounded terminal value of inflows is less than the present value of outflows over the project horizon.
What cash flows should I enter in a MIRR calculator?
Enter the cash flows in period order, with outflows as negative numbers and inflows as positive numbers. The first value is often the initial investment, but later periods may also include negative values for follow-on investment, maintenance, or remediation costs.
Why does MIRR require at least one negative and one positive cash flow?
MIRR compares the present value of negative payments with the future value of positive receipts. Without both sides, there is no meaningful modified internal rate of return to solve.
Is MIRR the same as CAGR?
No. CAGR measures growth from a starting value to an ending value. MIRR works with a full series of positive and negative cash flows, then converts the present-value outflows and terminal-value inflows into one equivalent periodic return.
Should I rank projects by MIRR or NPV?
Use both, but do not rely on MIRR alone. MIRR is helpful for a rate-based comparison, while NPV shows the amount of value created. A project with a lower MIRR can still be better if it creates much more present-value surplus.
How do finance rate and reinvestment rate affect MIRR?
A higher finance rate lowers the present value of later negative outflows, while a higher reinvestment rate raises the terminal value of positive inflows. Both rates can materially change the calculated MIRR, so sensitivity testing is important.
Can I use MIRR for monthly or quarterly cash flows?
Yes, if every cash flow is evenly spaced and the rates are entered for the same period. For monthly cash flows, use monthly finance and reinvestment rates; for annual cash flows, use annual rates.
