The Excel MIRR Function

Related Function:
IRR Function

Modified Internal Rate of Return

The Modified Internal Rate of Return indicates the profitability of an investment and therefore is commonly used in business, when choosing between investmentments.

This calculation uses a schedule of payments (including an initial investment, along with the net income payments), to calculate the compounded return, assuming the Net Present Value of the investment is zero.

The difference between the Modified Internal Rate of Return (MIRR) and the Internal Rate of Return (IRR) is that, in its calculation, the MIRR considers the initial cost of the investment and also the interest received on the reinvestment of cash, whereas the IRR does not consider these.

Further information on the Modified Internal Rate of Return can be found on the Wikipedia MIRR page


Basic Description

The Excel MIRR function returns the Modified Internal Rate of Return for a supplied series of periodic cash flows (ie. a set of values, which includes an initial investment value and a series of net income values).

The format of the function is :

MIRR( values, finance_rate, reinvest_rate )

Where the arguments are listed in the table below :


values -

A reference to a range of cells containing the series of cash flows (investment and net income values) that occur at regular periods

These must contain at least one negative value (representing payment) and at least one positive value (representing income)
finance_rate - The interest rate paid on the money used in the cash flows
reinvest_rate - The interest rate paid on the reinvested cash flows


Mirr Function Example

In the spreadsheet below, the cashflow for an investment is shown in cells B2 - B7. The initial investment of $100 is shown in cell B2 and the net income over 5 periods is shown in cells B3 - B7.

The MIRR function in cell D2 shows the calculation of the Modified Internal Rate of Return after 3 years and the function in cell D4 shows the Modified Internal Rate of Return after 5 years. The formulas for the equations are shown in the spreadsheet on the left and the results are shown in the spreadsheet on the right.

 Formulas:
Example of use of the Excel MIRR Function
 Results:
Excel MIRR Function Results

Further information and examples of the Excel Mirr function can be found on the Microsoft Office website.


Mirr Function Errors

If you get an error from the Excel Mirr function this is likely to be one of the following :

Common Errors
#DIV/0! - Occurs if the supplied values array doesn't contain at least one negative and at least one positive value
#VALUE! - Occurs if any of the supplied arguments are not recognised as numbers by Excel
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