What is the difference between IRR and MIRR?

IRR assumes inflows are reinvested at the IRR; MIRR uses a reinvestment rate you choose and always gives a single answer.

What rates should I use?

The finance rate is your cost of borrowing or capital; the reinvestment rate is what you can realistically earn on cash received, often the cost of capital too.

Is MIRR always lower than IRR?

Only when the reinvestment rate is below the IRR, which is the usual case. If the reinvestment rate is higher, MIRR can exceed IRR.

MIRR Formula and Calculator

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Modified Internal Rate of Return (MIRR) Calculator

The modified internal rate of return fixes two weaknesses of the ordinary IRR. IRR implicitly assumes that every cash inflow is reinvested at the IRR itself, which is often unrealistic for high-return projects, and it can give several answers when cash flows change sign. MIRR instead compounds the positive cash flows forward to the final period at a reinvestment rate you choose, and discounts the negative cash flows back to time 0 at a finance rate.

Formula

MIRR = (FV of positive cash flows at the reinvestment ratePV of negative cash flows at the finance rate)^1/n − 1

Where

FV: positive cash flows compounded forward to the final period at the reinvestment rate
PV: negative cash flows discounted back to time 0 at the finance (borrowing) rate
n: number of periods (number of cash flows − 1)

Calculator

Cash flows, starting with time 0

Enter outflows as negative numbers.

Finance rate (%)

Cost of the money used to fund the outflows.

Reinvestment rate (%)

Rate earned on the inflows.

Result and step-by-step solution

Modified internal rate of return

15.1471%

For comparison, the ordinary IRR of these cash flows is 16.3406%.

Compound inflows forward and discount outflows back
t Cash flow FV at 12% to period 3 PV at 10%
0 −10,000.00 10,000.00
1 3,000.00 3,763.20
2 4,200.00 4,704.00
3 6,800.00 6,800.00
Totals
FV of positive flows = 15,267.20; PV of negative flows = 10,000.00
Apply the formula
MIRR = (15,267.2010,000.00)^1/3 − 1 = 1.52672^1/3 − 1 = 15.1471%

t	Cash flow	FV at 12% to period 3	PV at 10%
0	−10,000.00		10,000.00
1	3,000.00	3,763.20
2	4,200.00	4,704.00
3	6,800.00	6,800.00

How to use the formula

That leaves one outflow today and one inflow at the end, so the return is simply (FV of inflows ÷ PV of outflows)^1/n − 1, where n is the number of periods. The calculator shows the future value of each inflow and the present value of each outflow in one table before combining them.

With an outlay of 10,000, inflows of 3,000, 4,200 and 6,800, a finance rate of 10% and a reinvestment rate of 12%, the MIRR is 15.15%, below the 16.34% IRR because the reinvestment rate is lower than the IRR. The result matches Excel’s MIRR(values, finance_rate, reinvest_rate). For the unadjusted rate see the IRR calculator.

Frequently asked questions

What is the MIRR formula?: MIRR = (FV of positive cash flows at the reinvestment rate ÷ PV of negative cash flows at the finance rate)^1/n − 1, with n the number of periods.
What is the difference between IRR and MIRR?: IRR assumes inflows are reinvested at the IRR; MIRR uses a reinvestment rate you choose and always gives a single answer.
What rates should I use?: The finance rate is your cost of borrowing or capital; the reinvestment rate is what you can realistically earn on cash received, often the cost of capital too.
Is MIRR always lower than IRR?: Only when the reinvestment rate is below the IRR, which is the usual case. If the reinvestment rate is higher, MIRR can exceed IRR.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.