MIRR Calculator

ByRobert H. Thorne, MBA ✓ Verified 📚 304 Calculators Authored

Corporate Finance Strategist & Startup Economics Lead · M.B.A. in Finance (Wharton), B.S. in Industrial Operations Engineering

📅 Published: Sep 28, 2026

The formula

MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1

What the modified irr tells you

IRR corrected for its reinvestment fallacy: outflows discounted at the finance rate, inflows compounded at a realistic reinvestment rate, bridged into one compound return.

Calculation: MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1. Enter your inputs and every substitution is shown below the result.

Reading the result

MIRR sits below IRR for high-return projects — the gap is the size of IRR’s self-flattery, and the number to quote in committee.

Rules of thumb: Use finance rate ≈ cost of capital, reinvest rate ≈ cost of capital or the firm’s marginal project return

Limitations and best practice

MIRR still hides scale (it is a rate) and is sensitive to which reinvestment rate you choose — state it on the slide.

This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.

Frequently asked questions

Does MIRR fix multiple sign changes?

Yes — with separate finance and reinvest rates the solution is unique, which is half its selling point.

Is MIRR always lower than IRR?

For profitable projects with positive IRR above the reinvest rate, yes — IRR’s implicit assumption is the higher fictional rate.

Source & methodology

Standard capital budgeting refinement (CFA curriculum).

MIRR explained: formula, worked example and honest limits

Capital decisions deserve better than a gut feeling — this page gives you the arithmetic to defend one. Searchers land on an MIRR page for three reasons — to plan, to compare options, and to check that somebody else’s arithmetic is honest. This tool serves all three, and everything after the calculator explains the model instead of hiding it.

Business runs on numbers that are cheap to compute and expensive to ignore. MIRR in Business & Entrepreneurship is one of those: MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1, and the gap between founders who check and founders who hope shows up exactly here.

The useful way to hold MIRR is as a ratio with a story attached: MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1 says how the parts combine, and the 23.85 % figure above is simply that sentence written in numbers. Everything that follows unpacks one clause of the sentence at a time.

What makes a calculation page trustworthy is that its copy is derived from its own arithmetic: here modified IRR = 23.85 %, recomputed every time a field changes, and the sensitivity section ranks the inputs that move the result — Initial outlay first, at ≈13.9 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.

Every input in MIRR, and what it does to the answer

One formula, published in full: MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1. Anything you can read, you can reproduce in a spreadsheet, and that reproducibility is the whole point of printing it rather than hiding it behind a button.

Initial outlay (negative $) (example value -250,000) is a quantity rather than a category — precision here is cheap and worth having. This input feeds the formula directly; a defensible figure here is worth more than false precision anywhere else.

Year 1 cash flow ($) (example value 160,000) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Be precise about the boundary (exact date, start of month); time inputs decide the exponent in most formulas.

Year 2 cash flow ($) (example value 120,000) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If the period is partial, decide whether you mean elapsed or planned time and keep that meaning across every field.

Year 3 cash flow ($) (example value 107,500) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. Be precise about the boundary (exact date, start of month); time inputs decide the exponent in most formulas.

Year 4 cash flow ($) (example value 92,500) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Use the value as of today, not as of the last time you looked — time fields drift silently.

Finance/reinvest rate (%) (example value 12) is a quantity rather than a category — precision here is cheap and worth having. Check the convention first: if the source says “6.5 % per year”, type 6.5 and let the formula do the rest.

The default MIRR calculation, written out in full

Rather than describe the calculation, here it is end to end — every substitution in order, starting from the inputs above. Starting figures: Initial outlay (negative $), Year 1 cash flow ($), Year 2 cash flow ($), Year 3 cash flow ($). Run to the end, the modified IRR resolves to 23.85 % — With inflows reinvested at 12% instead of fantasy, the honest compound return is 23.9% on the bands this tool uses.

Compound inflows at 12% to year 4: FV = $588,216
MIRR = ($588,216 ÷ $250,000)^(1∕4) − 1 = 23.85%

Terminal value of inflows — $588,216. If your inputs change, this is usually the first companion figure to move.

Gap vs naive IRR illusion — 2.35 ×. Compare it against the main result of 23.85 % before drawing conclusions.

Value created at 10% cost of capital — $151,760. If your inputs change, this is usually the first companion figure to move.

Overwrite any input above and every line of this example updates with it — the substitution is live, not a screenshot of somebody else’s numbers.

How far MIRR can reasonably move

The honest version of any estimate is a corridor, and this one is cheap to produce: MIRR was recomputed at 5 points along the dominant input, with every other field left untouched.

Initial outlay setting	Modified IRR
80 % of the example value	30.96 %
90 % of the example value	27.16 %
example inputs	23.85 %
110 % of the example value	20.93 %
120 % of the example value	18.33 %

That spread — 18.33 % at the low end, 30.96 % at the high — is what a careful read of MIRR looks like: a band you can state out loud, with the reason for each edge. Reproduce it in the form above by editing Initial outlay alone; the substitution steps will follow your figures exactly.

The levers behind MIRR, ranked by effect

Generic advice says “it depends on your inputs”; this section says exactly how much. Each field was perturbed by ±10 % in isolation and the modified IRR recomputed, so the ranking below is measured rather than asserted. For MIRR the ranking is measured rather than guessed, and it belongs to these defaults: shift the starting point and the order can shift with it.

Initial outlay +10 % → MIRR = 20.93 % · −10 % → 27.16 % (the modified IRR shifts ≈13.9 %)
Year 1 cash flow: ten percent up gives 25.02 %, ten percent down gives 22.65 % — ≈5.0 % of the modified IRR either way
Year 2 cash flow +10 % → MIRR = 24.64 % · −10 % → 23.05 % (the modified IRR shifts ≈3.4 %)
Nudge Year 3 cash flow by ±10 % and MIRR lands between 23.21 % and 24.48 % (sensitivity ≈2.7 %)
Finance/reinvest rate: ten percent up gives 24.47 %, ten percent down gives 23.23 % — ≈2.6 % of the modified IRR either way
Year 4 cash flow +10 % → MIRR = 24.33 % · −10 % → 23.36 % (the modified IRR shifts ≈2.1 %)

Initial outlay is the dominant lever here: ten percent either way moves the result by about 13.9 %, from 20.93 % to 27.16 %. Measure that input from a document rather than from memory, and treat Year 1 cash flow as the second priority (≈5.0 % per ten percent). The rest of the inputs earn only a rounding-error of attention, and that asymmetry is the practical payoff of measuring rather than asserting.

Interpreting the MIRR verdict

A number on its own is trivia; a number against a range is intelligence. On the example inputs the band reads “With inflows reinvested at 12% instead of fantasy, the honest compound return is 23.9%”; your own figures place you on a different rung of the same ladder. How much of that band is luck? On Initial outlay alone ten percent either way covers 20.93 % to 27.16 %. The practical reading rules: read the band as a starting hypothesis, then test it: change the two dominant inputs by ten percent and see whether the verdict survives. Verdicts that survive stress are the ones worth acting on.

In Business & Entrepreneurship, MIRR is one instrument in an orchestra: on its own it is a number, next to Terminal value of inflows and Gap vs naive IRR illusion it becomes a diagnosis. The tools linked above exist so the headline never has to carry that weight alone.

Why MIRR results go wrong — and how to prevent it

MIRR still hides scale (it is a rate) and is sensitive to which reinvestment rate you choose — state it on the slide. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.

Reporting the headline and quietly discarding Terminal value of inflows. The companions are where the shape of the trade-off survives the rounding.

One mistake is specific to this engine: assuming every input matters equally. The computation above shows Initial outlay dominating — a careful figure there beats false precision everywhere else.

A final trap is presentation: reporting MIRR to more decimal places than the inputs support. The tool prints what the arithmetic gives; you should quote only what your least precise field justifies.

Six things to confirm before acting on MIRR

State, in one sentence, which convention each rate, unit or period in the form is using.
Verify each input against its original source document, not memory.
Check Initial outlay before anything else: it is the measured dominant input, ≈13.9 % of MIRR per ten percent.
Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
Note the date and the inputs beside the number so the figure can be audited later.
Repeat the ±10 % test on the inputs that matter and see whether the decision — not just the number — still holds.

A routine for decision-grade MIRR

Using a calculator well sounds trivial, but the difference between a decision-grade figure and a throwaway one lives entirely in the routine. The routine for MIRR takes a minute to learn and applies to every input above.

Step 1 — collect, then type. Everything this tool asks for is listed above (initial outlay (negative $), year 1 cash flow ($), year 2 cash flow ($), year 3 cash flow ($), year 4 cash flow ($), finance/reinvest rate (%)). Pull each figure from something you can point at — paperwork, a dashboard, a label — before touching a field. Guesswork at the input stage cannot be repaired at the interpretation stage. If the verdict changes with a ten-percent nudge, report the nudge alongside the number.

Step 2 — start from the case you can defend. Enter pessimistic-but-honest figures first; the optimistic run is a ceiling, not a plan. A conclusion that holds on conservative inputs holds everywhere. The inputs are the part of the work that nobody else can do for you.

Step 3 — change one input at a time. Nudge a single field by ten percent, watch the headline and its companions move, then undo it. Two or three fields will dominate — the sensitivity table above already ranks them for this engine. Write the assumptions in the same file as the result, and future arguments take minutes instead of meetings.

Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. A figure nobody can reproduce is a figure nobody will act on twice.

Step 5 — save the story with the figure. A number without its inputs and its date is unusable within a quarter. Record 23.85 %, the assumptions behind it, and today’s date; your future self will be auditing a stranger’s arithmetic. Repeating a calculation with the same numbers proves only that the arithmetic is reliable — which is worth knowing.

Who actually uses MIRR — and when

Numbers earn their keep in conversations, and MIRR is no exception. In Business & Entrepreneurship discussions around Financial Analysis, this figure decides whether an option stays on the table: it converts an opinionated debate into an arithmetic one, and arithmetic is the only referee both sides accept. The test of a good estimate is not that it feels right but that it changes what you do.

Professionals in Financial Analysis use this style of calculation as a screening filter before spending real money or effort: a quick MIRR check eliminates weak options in minutes, and the survivors earn the deeper, slower analysis. Precision is a promise you make about your data; make sure your inputs can keep it.

There is a personal-administration use people overlook: periodic self-checking. MIRR quietly drifts as life changes — rates move, bodies change, costs compound — and re-running it a few times a year catches drift while correction is still cheap. The fastest sanity test is to guess the answer first and see how far the calculation disagrees.

Glossary for MIRR

Terminal value of inflows: $588,216 in the default MIRR calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
Gap vs naive IRR illusion: 2.35 × on the example inputs — a companion figure printed beside the headline of MIRR so that no result is read in isolation.
Value created at 10% cost of capital: $151,760 for the MIRR worked case; it sits next to the main result because it carries context the headline leaves out.
Modified IRR: The primary output of this tool: 23.85 % for the default inputs, computed exactly from MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1.
Worked example: The step-by-step substitution printed above, so the arithmetic can be re-derived by hand or in a spreadsheet.
Verdict band: A named zone on the range of plausible results; the example inputs land in “With inflows reinvested at 12% instead of fantasy, the honest compound return is 23.9%”, and your inputs may not.
Sensitivity (±10 %): How far the MIRR moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.

Method, sources and what this tool cannot tell you

Everything above runs on one stated formula, applied without hidden coefficients: MIRR = (FV of inflows at reinvest rate ÷ PV of outflows)^(1∕n) − 1. Source of record: Standard capital budgeting refinement (CFA curriculum). Specialist software layers extra coefficients on top of the same algebra; none are hidden here, and that transparency is what makes a disagreement traceable to a specific input instead of a black box.

Treat the output as a precise answer to the question you typed: exact arithmetic, transparent formula, published source, no hidden rounding. What that buys you is reproducibility — two people, two browsers, the same arithmetic, and a printed trail from inputs to result that either of them can audit.

Turning this MIRR into a decision

Pair this figure with the companion outputs above — the headline sizes the prize, the companions describe the risk.

The audience here is investors and founders comparing opportunities on equal terms. Everything you need to defend the result — formula, substitution, sensitivity, source — is printed above, so the only remaining variable is the honesty of your inputs.