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mirr

Modified internal rate of return

Syntax

Return = mirr(CashFlow, FinRate, Reinvest)

Arguments

CashFlow

Vector of cash flows. The first entry is the initial investment.

FinRate

Finance rate for negative cash flow values. Enter as a decimal fraction.

Reinvest

Reinvestment rate for positive cash flow values, as a decimal fraction.

Description

Return = mirr(CashFlow, FinRate, Reinvest) calculates the modified internal rate of return for a series of periodic cash flows. This function calculates only positive rates of return; for nonpositive rates of return, Return = 0.

Examples

This cash flow represents the yearly income from an initial investment of $100,000. The finance rate is 9% and the reinvestment rate is 12%.

Year 1

$20,000

Year 2

($10,000)

Year 3

$30,000

Year 4

$38,000

Year 5

$50,000

To calculate the modified internal rate of return on the investment

Return = mirr([-100000 20000 -10000 30000 38000 50000], 0.09,... 
0.12)

returns

Return =
         0.0832 (8.32%)

References

Brealey and Myers, Principles of Corporate Finance, Chapter 5

See Also

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