MIRR = (FV of the cash inflows discounted at the WACC / PV of cash outflows discounted at the firm's financing cost for the project)(1/n)-1 Video of the Day Step 1 Calculate the future value of the cash inflows by discounting them at the firm's WACC. For example, consider a proj...
Note:If you use theIRRfunction to calculate the internal rate of return for monthly cash flows, you need to multiply the IRR value by 12, as IRR calculates themonthly rate of return, notyearly. Method 7 – Using the MIRR Function to Calculate Modified IRR in Excel Steps: Select cellC15an...
The modified internal rate of return (MIRR) and the internal rate of return (IRR) are two closely-related concepts. The MIRR was introduced to address a few problems associated with the IRR. For example, one of the main problems with the IRR is the assumption that the obtained positive cas...
Understanding the differences between the IRR, MIRR, and XIRR functions in Excel can streamline your financial analysis and investment decision-making. IRR Function The Internal Rate of Return (IRR) function is ideal when your cash flows are expected to occur at regular, consistent intervals. It ...
Instead of manually performing the detailed formula to calculate MIRR, you can use Excel's MIRR function to calculate it for you.
How to Calculate MIRR (Modified Internal Rate of Return) on My Financial Calculator Step 3 Raise the number your calculated in Step 1 to the 1 divided by the number of years between the current value and the present value. For example, if the future value was predicted for 5 years in th...
IRRB= 20.8% MIRRB= 14.7% Notice immediately that Case Alpha also has a higher MIRR value than Case Beta, but both MIRR values are much closer to each other than are the two IRR values. The interpretation of MIRR is easier to understand after showing first how to calculate MIRR. Unlike ...
The MIRR function considers both the finance and reinvest rates to calculate the modified internal rate of return. Syntax: =MIRR(values, finance_rate, reinvest_rate) Argument Explanation: Return Parameter: The Modified Internal Rate of Return while taking into account the discount rate and reinvest...
XIRR function(extended internal rate of return): Used to calculate the rate of return for a series of cash flows with different-sized payment periods, which can yield a more accurate rate than the standard IRR function. MIRR function(modified internal rate of return): Used to calculate the ra...
as was the case when calculating IRR and MIRR above. Instead, they occur at different periods. We use the XIRR function below to solve this calculation. Instead, you'll enter the dates and cash flow amounts as above.