# MIRR function

Returns the modified internal rate of return for a series of periodic cash flows. MIRR considers both the cost of the investment and the interest received on reinvestment of cash.

## Syntax

MIRR(values,finance_rate,reinvest_rate)

Argument

Description

Remarks

values

An array or a reference to cells that contain numbers. These numbers represent a series of payments (negative values) and income (positive values) occurring at regular periods.

• Values must contain at least one positive value and one negative value to calculate the modified internal rate of return. Otherwise, MIRR returns the #DIV/0! error value.

• If an array or reference argument contains text, logical values, or empty cells, those values are ignored; however, cells with the value zero are included.

finance_rate

The interest rate you pay on the money used in the cash flows.

• None.

reinvest_rate

The interest rate you receive on the cash flows as you reinvest them.

• None.

## General remarks

• MIRR uses the order of values to interpret the order of cash flows. Be sure to enter your payment and income values in the sequence that you want and with the correct signs (positive values for cash received, negative values for cash paid).

• If n is the number of cash flows in values, frate is the finance_rate, and rrate is the reinvest_rate, then the formula for MIRR is:

## Example

Suppose you're a commercial fisherman just completing your fifth year of operation. Five years ago, you borrowed \$120,000 at 10 percent annual interest to purchase a boat. Your catches have yielded \$39,000, \$30,000, \$21,000, \$37,000, and \$46,000. During these years you reinvested your profits, earning 12 percent annually.

To make the following example easier to understand, you can copy the data to a blank sheet and then enter the function underneath the data. Do not select the row or column headings (1, 2, 3... A, B, C...) when you copy the sample data to a blank sheet.

 1 2 3 4 5 6 7 8 9
 A B Data Description -120,000 Initial cost 39,000 Return first year 30,000 Return second year 21,000 Return third year 37,000 Return fourth year 46,000 Return fifth year 10.00% Annual interest rate for the \$120,000 loan 12.00% Annual interest rate for the reinvested profits Formula Description (Result) =MIRR(A2:A7,A8,A9) Investment's modified rate of return after five years (13%) =MIRR(A2:A5,A8,A9) Modified rate of return after three years (-5%) =MIRR(A2:A7,A8,14%) Five-year modified rate of return based on a reinvest_rate of 14 percent (13%)
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