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Modified Internal Rate of Return = MIRR

Created by Arthur Aslanyan (Nafta College), last modified on Sep 24, 2023

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One of the Investment Project:

$\begin{array}{l}\displaystyle \mbox{MIRR} = \sqrt[n]{ \frac{FV[CF^+]}{-PV[CF^-]}} } - 1\end{array}$

The usual practise is to give preferences to the Investment Projects with higher MIRR and make a direct comparison of MIRR against the Weighted Average Cost of Capital (WACC).

MIRR is similar to IRR in nature but free from some common IRR issues.

The corporate investment policy usually dictates that:

Investment Projects with MIRR < WACC should be rejected
Investment Projects with higher MIRR should have a financing priority over the Investment Projects with lower MIRR

See also

Economics / Investment / Financial Investment / Financial Investment Metrics

[ Financial Investment Project ]

[ Weighted Average Cost of Capital (WACC) ] [ Cash Discount ] [ Net Present Value (NPV) ]

[ Internal Rate of Return (IRR) ]

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