How this calculation works
Ordinary internal rate of return can be difficult to interpret when cash-flow signs change repeatedly. Modified IRR separates the rate used to finance negative flows from the rate used to accumulate positive flows. This page converts those two present and terminal values into one equivalent per-period rate. Its financing and reinvestment assumptions are explicit rather than hidden in a single root-solving calculation.
MIRR = [terminal value of positive flows / present value magnitude of negative flows]^(1/periods) − 1A worked example
For flows −100, zero and 121, the negative present-value magnitude is one hundred and positive terminal value is 121. The two-period equivalent factor is the square root of 1.21. MIRR is ten percent per period. Adding intermediate positive or negative flows would make the separate financing and reinvestment rates relevant to their time adjustments.
Good to know
At least one negative and one positive flow are required. The page does not infer taxes, working-capital recovery, terminal disposal value or whether reinvestment is actually available at the entered rate. No investment recommendation or guaranteed return is produced. Compare assumptions and discounted value as well as any single percentage before making a financial decision.
Reference: Microsoft — MIRR financing and reinvestment conventions (opens in a new tab) ↗
What this calculation answers
Ordinary internal rate of return can be difficult to interpret when cash-flow signs change repeatedly. Modified IRR separates the rate used to finance negative flows from the rate used to accumulate positive flows.
This page converts those two present and terminal values into one equivalent per-period rate. Its financing and reinvestment assumptions are explicit rather than hidden in a single root-solving calculation.
The Conventional cash flow IRR calculator solves a conventional cash-flow root. MIRR instead uses separately entered financing and reinvestment assumptions over one fixed horizon.
Use the right input conventions
Enter equally spaced flows starting at time zero, with outflows negative and inflows positive. A period with no cash flow needs an explicit zero; leaving an empty comma position could otherwise shift the timing of later cash.
Both rates are per the same period as the cash-flow spacing. Annual inputs are inappropriate if the flows are monthly unless first converted to a consistent monthly convention.
Interpret the result
Negative flows are discounted to time zero at the financing rate. Positive flows accumulate to the final entered period at the reinvestment rate. The final rate spans the full number of intervals between first and last entries.
This construction is not dated XIRR and does not automatically rank competing projects by value created. The specified horizon and external rates can materially affect the comparison.
Work through the example
For flows −100, zero and 121, the negative present-value magnitude is one hundred and positive terminal value is 121. The two-period equivalent factor is the square root of 1.21.
MIRR is ten percent per period. Adding intermediate positive or negative flows would make the separate financing and reinvestment rates relevant to their time adjustments.
Where the model stops
At least one negative and one positive flow are required. The page does not infer taxes, working-capital recovery, terminal disposal value or whether reinvestment is actually available at the entered rate.
No investment recommendation or guaranteed return is produced. Compare assumptions and discounted value as well as any single percentage before making a financial decision.
A few questions, answered
Can I omit a zero-flow period?
No. Omitting it shortens the timing; enter an explicit zero to preserve the equally spaced schedule.
What changes in the comparison?
Add an intermediate receipt and inspect how reinvestment affects its terminal value.