MIRR Calculator (Modified Internal Rate of Return)

MIRR is an improved version of IRR: positive cash flow values are compounded to the end of the period at the reinvestment rate, negative cash flow values are discounted to the start at the finance rate, and then the single growth rate connecting the two is found. The formula: MIRR = (FV of positive cash flows / PV of negative cash flows)^(1/n) − 1, where n = number of periods. The result is always unique, unlike IRR which can have multiple roots.

Classic IRR implicitly assumes that every incoming cash flow is reinvested at a rate equal to the IRR itself. For a project with a 40% IRR, that means assuming you can keep earning 40% on every rupiah that comes back — usually unrealistic. MIRR replaces that assumption with an explicit reinvestment rate you set yourself, for example equal to the cost of capital or a deposit rate you can actually achieve.

The finance rate is the cost of funds to cover negative cash flows (for example loan interest or the company's cost of capital); it is used to discount negative cash flows to present value. The reinvestment rate is the assumed rate of return for positive cash flows that are reinvested; it is used to compound positive cash flows to future value. The two may be the same, but separating them makes MIRR more honest: the cost of debt is rarely equal to the reinvestment return.

In general, if the reinvestment rate you use is higher than the project's IRR, MIRR will be greater than IRR; if the reinvestment rate is lower than IRR, MIRR will be smaller than IRR. Example: cash flows of −1000, +300, +400, +500 give an IRR of about 8.90%. With a 10% finance rate and 12% reinvestment rate, the MIRR is about 9.82% — greater than IRR because 12% > 8.90%. If the reinvestment rate were set to 5%, MIRR would fall below IRR.

Because MIRR always produces one value per project (no multiple-root problem like IRR) and uses the same reinvestment assumption for all projects being compared, MIRR-based rankings are more consistent. The project with the highest MIRR above the hurdle rate (for example the cost of capital) is generally selected first. Keep in mind: MIRR is a relative measure (a percentage), not an absolute value — two projects with the same MIRR can create very different rupiah values, so for the final decision always pair it with NPV.

The IRR calculator computes the discount rate that makes NPV = zero assuming reinvestment at the IRR itself; if you need classic IRR with an iteration table and NPV profile, use the IRR calculator. The NPV calculator assesses a project's absolute value at a given discount rate; if you need NPV, PI, and payback, use the NPV calculator. This MIRR calculator is specifically for MIRR: separate finance and reinvestment rates, IRR vs MIRR comparison, a two-project comparator based on MIRR, and a solver for the reinvestment/funding rate from a target MIRR.

First, MIRR still depends on the two assumptions you enter (finance rate and reinvestment rate) — pick the wrong numbers and the result is wrong too. Second, MIRR does not measure scale: a small project can have a high MIRR but a small absolute value. Third, MIRR assumes positive cash flows are invested all at once at a single constant rate. Fourth, for unconventional cash flow series (sign changing many times), MIRR does solve the multiple-root problem, but its economic interpretation still requires care. This calculator is a computation aid, not investment advice.