How to Calculate Modified IRR with MIRR in Excel

Get a realistic return for a vineyard expansion with a mid-project replanting cost, using separate finance and reinvestment rates.

You will learn to

• Calculate MIRR with finance and reinvestment rates
• See how much IRR overstates the return
• Make an approval decision from MIRR

How it works

MIRR(values, finance_rate, reinvest_rate) returns a modified internal rate of return. Negative cash flows are discounted at the finance rate (your borrowing cost) and positive cash flows are compounded at the reinvest rate (what you can realistically earn on them).

IRR quietly assumes every inflow is reinvested at the IRR itself, which overstates returns for high-IRR projects, and it can give several answers when cash flows change sign more than once. MIRR always gives one, more conservative rate.

=MIRR(B2:B8,F2,F3)