Modified Internal Rate of Return (MIRR) - Basics, Formula, Calculations in Excel (Step by Step)

Modified Internal Rate of Return (MIRR) Tutorial - Chapters
00:00 - Introduction
01:10 - What is MIRR?
01:57 - Multiple IRR Problem
04:23 - Overestimate of Rate of Return
09:10 - Calculating MIRR
10:03 - MIRR Formula
11:55 - MIRR Excel Function
In this video, we will talk about MIRR, its calculations, how it tells the limitations of IRR, and its uses.
What is Modified Internal Rate of Return (MIRR)?
MIRR or Modified Internal Rate of Return accurately assesses the potential profits of an investment. Unlike IRR, which exaggerates and entices investors for investment, MIRR offers a better estimate of the expected ROI of an investment.
It can be calculated through:
- Discounted Approach
- Reinvestment Method
- Combination Approach
Uses of MIRR:
- Eradicates the issues of multiple IRRs and overestimation of the rate of return
- Allows adjustments for growth
- Adds reinvestment rates
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For more details, you can refer to our article at - www.wallstreetmojo.com/mirr/
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[@yashfitness959]

Thank you!

[@mohitsingha210]

Thanks a lot, I had asked about an alternative to IRR from your video on IRR, this clarifies my doubt. Thanks again!!

[@wallstreetmojo]

Glad it was helpful!

[@prasetio7]

Thank you

[@mufassirsaleem7043]

Thank you, this was very useful. In real life situation, can we use the interest rate as the finance rate and the COC as the re investment rate.

[@syedyasir9240]

Very useful ... request you to update your course as well on financial modeling or add some recent cases FY20 FY21

[@qwertyuiopasdfghjkl-ew1qi]

love your video sir!

[@wallstreetmojo]

Appreciate your feedback, more content coming soon!

[@user-rn3ho3vk2b]

Excellent video. Good explanation of the concept. I would have used the phrase, "Cost of equity" rather than "cost of capital." You're trying to find out the rate of return you can expect on your investment, which is equity, not the cost of capital which sounds like the WACC, which includes debt capital.

[@digvijaychoudhari4128]

Keep going sir

[@sachi04denise]

thank you so much.

[@wallstreetmojo]

🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

[@AmandaHunter-ym5dy]

nice

[@yizhang6117]

good explanation!

[@wallstreetmojo]

Thank You

[@KJUnni]

Well explained and thanks for the information. I do have a question to ask, while working out some trial formula's using MIRR, I just noticed that when the cash in (-ve value) is happening at the beginning of the year, the finance rate (whatever value it maybe), is not having any impact on the MIRR calculation. Could you please clarify?

[@nikitachomal8435]

Ya same question

[@kanchandatta4668]

Excellent

[@wallstreetmojo]

🎁 Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

[@kanchandatta4668]

If one project has successive outflow ( say successive 6 years) how to calculate initial capital ? Should we calculate the present value of outflow in year 2 , similarly upto year 6 then add these p.v with current years amount to make initial investment?

[@dharminsanghavi7365]

Sir, MIRR formula in excel do not ask to consider dates or years into consideration in comparision to XIRR formula. Is there any solution to calculate MIRR which considers dates too ? I mean if you have multiple outflows and inflows then How to get dates effect included in MIRR ?

[@slvrcross]

If I wanted to find my MIRR on a MONTHLY BASIS, would I need to add any numbers to the equation?