Free calculator · Valuation & Returns
IRR vs MIRR
Calculates IRR and modified IRR side by side, with MIRR compounding interim cash flows forward at an explicit reinvestment rate instead of at the IRR itself. Inputs are the initial investment, the interim annual cash flow, the exit cash flow, the holding period, and the reinvestment rate.
By Devon Coombs, CPA, MBA · Assistant Teaching Professor of Finance, Santa Clara University · Reviewed October 2026
From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.
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What is the difference between IRR and MIRR?
Internal rate of return (IRR) is the discount rate that makes the investment’s net present value zero. Modified IRR (MIRR) compounds positive cash flows at a stated reinvestment rate. MIRR makes a terminal-wealth assumption explicit; calculating IRR itself does not require actual reinvestment.
Interactive Tool
IRR vs MIRR
IRR
45.0%
rate where NPV equals zero
MIRR
32.9%
reinvest at 12.0%
Terminal value of inflows
$2,071K
compounded at 12%
IRR − MIRR gap
12.1%
difference between return measures
IRR solves for the discount rate that makes NPV zero; calculating it does not require reinvesting interim cash. MIRR explicitly compounds inflows at your chosen reinvestment rate. This model assumes one initial outflow, and the exit input is the entire final-year cash flow.
Understand the numbers
A worked example, step by step
The calculator uses thousands of dollars. Enter an initial investment of 1,000, interim annual cash flow of 100, final-year exit cash flow of 1,200, three years, and a 6% reinvestment rate.
This fixed teaching example is separate from your saved calculator inputs. Enter the assumptions above to reproduce it.
- Cash flows are −$1,000,000 today, +$100,000 at year 1, +$100,000 at year 2, and +$1,200,000 at year 3.
- Terminal inflows = $100,000 × 1.06² + $100,000 × 1.06 + $1,200,000 = $1,418,360.
- MIRR = ($1,418,360 ÷ $1,000,000)^(1/3) − 1 ≈ 12.36% per year.
About 12.36% MIRR with 6% reinvestment
What the result tells you
The final-year input is the entire cash flow for that year. Do not add another interim payment unless it is included in that exit input. This distinction avoids double counting.
Assumptions to check
This tool assumes one initial outflow followed by nonnegative annual inflows. General MIRR also discounts later negative cash flows using a finance rate; this simplified tool does not model those additional outflows. IRR and MIRR are return measures, not guarantees, and should be read alongside NPV and dollar value created.
Try one change
Change only the reinvestment rate. MIRR changes, while the IRR of the original cash-flow stream stays fixed.
Test it in the calculator ↑Reference: Microsoft: MIRR inputs and timing.
Learn the concept
This calculator comes from the free Entrepreneurial Finance course, where the concept is taught with readings, worked examples, and practice questions.
When to use this measure
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Built by Devon Coombs, CPA, MBA, Assistant Teaching Professor of Finance at Santa Clara University.