MIRR function

This article describes the formula syntax and usage of the MIRRfunction in Microsoft Excel.

Description

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)

The MIRR function syntax has the following arguments:

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

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

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 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:

    Equation

Example

The example may be easier to understand if you copy it to a blank worksheet.

How do I copy an example?

  1. Select the example in this article.

    Important   Do not select the row or column headers.

    selecting an example from help

    Selecting an example from Help

  2. Press CTRL+C.

  3. In Excel, create a blank workbook or worksheet.

  4. In the worksheet, select cell A1, and press CTRL+V.

    Important   For the example to work properly, you must paste it into cell A1 of the worksheet.

  5. To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

After you copy the example to a blank worksheet, you can adapt it to suit your needs.

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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%)

Applies To: Excel 2010, Excel Starter, Excel Online, SharePoint Online



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