Calculate MIRR in Excel

Understanding MIRR Function

The MIRR function in Excel calculates the modified internal rate of return for a series of cash flows occurring at regular intervals. MIRR considers both the cost of investment and the interest received on reinvestment of cash flows.

Entering Cash Flows

Input cash flows in a sequential order in Excel, ensuring they are in the right sequence with the correct signs. Positive numbers represent income, and negative numbers represent payments.

Setting Up MIRR Arguments

MIRR requires three arguments: values, finance_rate, and reinvest_rate. The values argument must be an array or cell reference. The finance_rate is the interest paid on the money used, and the reinvest_rate is the interest earned on reinvestment.

Using the MIRR Function

To calculate MIRR, type =MIRR(values, finance_rate, reinvest_rate) into a cell, replacing values, finance_rate, and reinvest_rate with the respective cell references or actual numbers.

Interpreting the Result

The result returned by MIRR is the modified internal rate of return for the cash flows provided, expressed as a decimal.

Common Use Cases

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  Evaluating the profitability of a series of cash flows from a project or investment
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  Comparing the potential returns of different investment opportunities
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  Assessing the financial feasibility of long-term projects
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  Determining the expected return to inform investment decision-making
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  Conducting sensitivity analysis to understand the impact of varying financing and reinvestment rates

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