MIRR Calculator
Your cost of borrowing / loan interest rate
Rate at which positive cash flows are reinvested
Use negative values for outflows, positive for inflows.
Enter your finance rate, reinvestment rate, and all cash flows to see the MIRR instantly.
Initial investment should be a negative value.
This MIRR calculator takes your project's cash flows, your borrowing cost, and the rate at which you reinvest profits, then returns the modified internal rate of return in seconds. That's the number most standard IRR tools get wrong, because they assume you reinvest every dollar at the same ambitious rate as the project itself, which almost never happens in real life. Read on and you'll also find out why a lower MIRR can actually be the more trustworthy result.
By the end of this page, you'll know:
- What modified internal rate of return actually measures and why IRR alone can mislead you
- How to enter cash flows correctly, including mid-project costs and irregular outflows
- How to calculate MIRR by hand, step by step, using real numbers
- The one mistake most people make when setting their reinvestment rate
How to Use the MIRR Calculator
There are just three things the calculator needs from you: two rates and a list of cash flows. Here's how each field works.
- 1
Finance Rate
The interest rate on the loan or capital you're using to fund the project. If you borrowed money at 8.5% per year, that's your finance rate. Don't have a loan? Use your cost of capital or the rate you'd otherwise earn keeping that money in a savings account.
- 2
Reinvestment Rate
The rate at which you expect to reinvest the positive cash flows the project generates. This is often a market rate, a bond yield, or the return on your next-best investment. It's almost always lower than the project's own return, which is exactly the point.
- 3
Initial Investment
Enter this as a negative number. If you put $14,750 into a project on day one, type -14750. It represents cash leaving your pocket.
- 4
Annual Cash Flows (Year 1 onward)
Enter one value per year. Positive numbers are inflows (revenue, returns). Negative numbers are additional outflows (repair costs, reinvestment). You can add up to 20 periods and remove any row you don't need.
Worked Example: Sarah evaluates a solar installation
Sarah is deciding whether to install solar panels on her rental property for $14,750 upfront. She expects $3,240 back in Year 1, $4,175 in Year 2, a $1,820 repair outflow in Year 3, then $5,650 and $6,380 in Years 4 and 5. Her finance rate is 8.5% and she'll reinvest profits at 11%.
Finance Rate
8.5%
Reinvestment Rate
11%
Initial Investment
-$14,750
Year 1
+$3,240
Year 2
+$4,175
Year 3
-$1,820
Year 4
+$5,650
Year 5
+$6,380
The calculator returns a MIRR of 7.55%. Since that's below her 8.5% cost of capital, the project doesn't quite clear the bar on its own merits. But compare that to the standard IRR, which comes out closer to 22% on paper, and you can see how big the gap is when you use a realistic reinvestment assumption. Now you know why MIRR matters.
What Is MIRR (Modified Internal Rate of Return)?
Say Sarah runs the same solar project numbers through a basic IRR calculator. It spits out something like 22%. Sounds great. But that number is built on an assumption hiding quietly in the math: every single dollar Sarah earns from the project, she immediately reinvests at that same 22% rate for the rest of the project's life. Good luck with that! Finding a 22% reinvestment opportunity every year, reliably, is the kind of thing that exists in spreadsheets but not on the high street.
MIRR fixes this by splitting the problem in two. Negative cash flows (money going out) get discounted back to today using your actual borrowing cost. Positive cash flows (money coming in) get compounded forward using a realistic reinvestment rate you choose yourself. The result is a single return figure that doesn't assume you're a hedge fund.
Modified internal rate of return is the annualised growth rate that equates the present value of all your outflows with the future value of all your inflows. It's how much your money actually grows per year, given both what you're paying to borrow and what you can realistically earn on the profits.
How MIRR Differs From IRR
| IRR | MIRR | |
|---|---|---|
| Reinvestment assumption | Project's own return rate | Your chosen reinvestment rate |
| Finance rate | Same as project rate | Separate, user-defined |
| Multiple solutions | Can produce multiple IRRs | Always one unique result |
| Realism | Often overstates returns | More conservative, more honest |
And here's a thing people often miss: MIRR always produces exactly one answer. Standard IRR can produce multiple valid results when cash flows switch sign more than once (like Sarah's Year 3 repair). MIRR doesn't have that problem, which makes it far more reliable when your project has mid-stream costs. That's why project finance teams have quietly moved toward it over the last decade.
The MIRR Formula
Here's the formula in full:
MIRR = (FV_positive / PV_negative)^(1/n) - 1
Where n is the number of periods, FV uses the reinvestment rate, and PV uses the finance rate.
Variables:
- FV_positiveFuture value of all positive cash flows, compounded at the reinvestment rate to the final period
- PV_negativePresent value of all negative cash flows (including the initial investment), discounted at the finance rate
- nNumber of periods between the first and last cash flow
- RRReinvestment rate (the rate applied to positive cash flows)
- FRFinance rate (the rate applied to negative cash flows)
Let's Walk Through Sarah's Numbers Manually
Find FV of all positive cash flows at RR = 11%
Year 1: $3,240 × (1.11)⁴ = $3,240 × 1.5181 = $4,918.64
Year 2: $4,175 × (1.11)³ = $4,175 × 1.3676 = $5,709.73
Year 4: $5,650 × (1.11)¹ = $5,650 × 1.11 = $6,271.50
Year 5: $6,380 × (1.11)⁰ = $6,380 × 1.00 = $6,380.00
FV total = $23,279.87
Find PV of all negative cash flows at FR = 8.5%
Year 0: $14,750 / (1.085)⁰ = $14,750.00 (no discounting needed)
Year 3: $1,820 / (1.085)³ = $1,820 / 1.2773 = $1,425.16
PV total = $16,175.16
Now plug into the MIRR formula
MIRR = ($23,279.87 / $16,175.16)^(1/5) - 1
= (1.4393)^(0.2) - 1
= 1.0755 - 1
= 7.55%
And just like that, Sarah's 7.55% MIRR tells her this project returns less than her 8.5% borrowing cost. Totally worth running the numbers before signing a contractor. Of course, you can skip all this counting and let the MIRR calculator do it instantly.
Real-World Applications
Comparing two business projects
Kevin is choosing between a manufacturing expansion and a product line acquisition. Both show an IRR above 20%. But when he sets a realistic reinvestment rate of 9%, the MIRR on the acquisition drops to 11.3% while the expansion holds at 14.7%. The acquisition looked better on paper. It wasn't. MIRR caught what IRR missed.
Rental property analysis
Consider a buy-to-let investor who expects net rental income to vary year by year and plans to sell in Year 7 at a profit. Standard IRR struggles when the cash flows are irregular and there's a large lump-sum exit. MIRR handles it cleanly: set your mortgage rate as the finance rate, set your savings account rate as the reinvestment rate, and you get a single realistic return figure that accounts for both the cost of the loan and what you actually earn on the rent cheques sitting in the bank each month.
Capital budgeting with a hurdle rate
Most finance teams have a hurdle rate — the minimum return a project must clear to get approved. Because MIRR is the more conservative number, it's becoming the preferred metric for hurdle-rate comparisons. If your project's MIRR exceeds the hurdle rate, that's a signal you can trust. 🎯
Freelance project pricing
Priya is a consultant who fronts $4,300 in software licences and setup costs before a client contract begins paying out over 18 months. She uses the MIRR calculator with a 12% reinvestment rate (her typical savings rate on cash buffers) to check whether accepting the engagement is worth tying up that capital. It's a small calculation. But it takes 30 seconds and prevents a $4,300 mistake.
The Most Common MIRR Mistake
Here's where most people get confused about MIRR: they set the finance rate and the reinvestment rate to the same number, usually just copying the interest rate from the loan offer. So both fields say 8.5%.
When both rates are identical, MIRR and IRR converge toward the same answer, and you've completely defeated the purpose. The whole point is that these two rates are almost always different in real life. Your borrowing cost is what the bank charges you (often 6 to 10%). Your reinvestment rate is what you can actually earn on cash sitting in a money market account or a bond fund (often 3 to 5%).
Note that setting them equal doesn't break the calculator. It just makes the output meaninglessly optimistic, the same way IRR is. So before you hit calculate, ask yourself: "Am I really going to earn 8.5% on every pound of profit I pull out of this project?" If the honest answer is no, use a lower reinvestment rate.
That's why the finance rate and reinvestment rate have separate input fields here. They should almost always be different numbers.
FAQs
What's the difference between MIRR and IRR?
IRR assumes all positive cash flows get reinvested at the project's own return rate, which is often unrealistically high. MIRR lets you set a separate reinvestment rate (something you can actually achieve) and a separate finance rate (your actual borrowing cost). The result is a more conservative and more reliable number. In Sarah's solar example, the IRR came out near 22% while the MIRR was 7.55%. Same project, very different story depending on which metric you trust.
What should I use as my reinvestment rate?
Use the return you can realistically earn on cash you're not actively deploying in this project. Common choices are your savings account rate, a short-term government bond yield, or your company's weighted average cost of capital if you're doing corporate analysis. The key is honesty. Don't inflate this number to make the project look better. A reinvestment rate between 3% and 8% is typical for most real-world investors.
Can MIRR be negative?
Yes, and it's not a bug — it's a signal. A negative MIRR means the project is expected to destroy value. The present value of your outflows exceeds the future value of your inflows even when reinvested. If you're seeing a negative result, either the project's returns are genuinely too low, or there are large mid-stream costs (like Sarah's Year 3 repair) that are dragging down the final number. Either way, that's important information to have before you commit.
Why does MIRR always give one result while IRR sometimes gives multiple?
Here's the step-by-step reason: (1) IRR solves a polynomial equation. When cash flows change sign more than once (positive, then negative, then positive again), that polynomial can have multiple roots, meaning multiple valid IRRs. (2) MIRR avoids this entirely because it doesn't solve for the root of a polynomial. It directly computes FV of positives and PV of negatives, then takes the nth root of their ratio. That calculation always has exactly one answer. So projects with irregular cash flows (like mid-project repairs or phased investments) are far better analysed with MIRR.
My MIRR is lower than my IRR. Is that normal?
Almost always, yes. Because MIRR uses a realistic (lower) reinvestment rate instead of the project's own return, it will typically produce a smaller percentage. That's not a problem. It's the whole point. Think of the difference between IRR and MIRR as the gap between best-case and realistic. A MIRR that's still above your hurdle rate or cost of capital is a strong sign the project genuinely clears the bar, not just on paper.
Related calculators: IRR Calculator · NPV Calculator · ROI Calculator