Excel > Function References > Financial Functions

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.


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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%)

See also
RATE function
XIRR function
XNPV function
List of all functions (by category)

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