Modified Internal Rate of Return (MIRR)

Modified Internal Rate of Return or MIRR is the discount rate that equates the present value of investments (outflows) with the future value of incoming cash flows (inflows):

\begin{align} \sum_{i=0}^{t}\frac {COF_{i}}{(1+r)^{i}} &=\frac {\sum_{i=0}^{t}CIF_{i}(1+r)^{t-i}}{(1+MIRR)^{t}} \\ PV_{COF} &=\frac {FV_{CIF}}{(1+MIRR)^{t}} \\ MIRR &= \sqrt[t]{\frac{FV_{CIF}}{PV_{COF}}}-1 \end{align}

t— number of periods;
r— discount rate (e.g., weighted average cost of capital);
COF— cash outflow;
CIF— cash inflow.

See also:

• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Profitability Index (PI)
• Future Value
• Present Value
• Present Value of Annuity