Modified Internal Rate of Return Solution

STEP 0: Pre-Calculation Summary
Formula Used
Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1)
MIRR = 3*((PV/PVO)^(1/t)*(1+I)-1)
This formula uses 5 Variables
Variables Used
Modified Internal Rate of Return - Modified Internal Rate of Return is a modified version of the Internal Rate of Return (IRR) that addresses some of the issues associated with IRR.
Present Value - The present value of the annuity is the value that determines the value of a series of future periodic payments at a given time.
Cash Outlay - Cash Outlay refers to the actual expenditure or payment of cash for a particular purpose, investment, or expense.
Number of Years - The number of years is the total period for which the certificate of deposit is done.
Interest - Interest is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
STEP 1: Convert Input(s) to Base Unit
Present Value: 10 --> No Conversion Required
Cash Outlay: 972.13 --> No Conversion Required
Number of Years: 5 --> No Conversion Required
Interest: 7 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
MIRR = 3*((PV/PVO)^(1/t)*(1+I)-1) --> 3*((10/972.13)^(1/5)*(1+7)-1)
Evaluating ... ...
MIRR = 6.60873846173228
STEP 3: Convert Result to Output's Unit
6.60873846173228 --> No Conversion Required
FINAL ANSWER
6.60873846173228 6.608738 <-- Modified Internal Rate of Return
(Calculation completed in 00.004 seconds)

Credits

Created by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
Vishnu K has created this Calculator and 50+ more calculators!
Verified by Kashish Arora
Satyawati College (DU), New Delhi
Kashish Arora has verified this Calculator and 25+ more calculators!

12 Capital Budgeting Calculators

Overall Cost of Capital
Go Overall Cost of Capital = (Market value of the firm’s equity)/(Market value of the firm’s equity+Market Value of the Firm’s Debt)*Required Rate of Return+(Market Value of the Firm’s Debt)/(Market value of the firm’s equity+Market Value of the Firm’s Debt)*Cost of Debt*(1-Tax Rate)
Discounted Payback Period
Go Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate)
Net Present Value (NPV) for even cash flow
Go Net Present Value (NPV) = Expected Cash Flow*((1-(1+Rate of Return)^-Number of Periods)/Rate of Return)-Initial Investment
Capital Asset Pricing Model
Go Expected Return on Investment = Risk Free Rate+Beta on Investment*(Expected Return on Market Portfolio-Risk Free Rate)
Modified Internal Rate of Return
Go Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1)
Cost of Retained Earnings
Go Cost of Retained Earnings = (Dividend/Current Stock Price)+Growth Rate
After-Tax Cost of Debt
Go After Tax Cost of Debt = (Risk Free Rate+Credit Spread)*(1-Tax Rate)
Terminal Value using Perpetuity method
Go Terminal Value = Free Cash Flow/(Discount Rate-Growth Rate)
Accounting Rate of Return
Go Accounting Rate of Return = (Average Annual Profit/Initial Investment)*100
Payback Period
Go Payback Period = Initial Investment/Cashflow per Period
Terminal Value using Exit Multiple Method
Go Terminal Value = EBITDA at Last Period*Exit Multiple
Cost of Debt
Go Cost of Debt = Interest Expense*(1-Tax Rate)

Modified Internal Rate of Return Formula

Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1)
MIRR = 3*((PV/PVO)^(1/t)*(1+I)-1)

What is Modified Internal Rate of Return?

Modified internal rate of return (MIRR) is a similar technique to IRR. Technically, MIRR is the IRR for a project with an identical level of investment and NPV to that being considered but with a single terminal payment. A simple example will help explain matters.
In simpler terms, MIRR assumes that positive cash flows are reinvested at a specified rate, and negative cash flows are financed at a different rate. The result is a modified rate of return that provides a more realistic assessment of an investment's profitability.

How to Calculate Modified Internal Rate of Return?

Modified Internal Rate of Return calculator uses Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1) to calculate the Modified Internal Rate of Return, The Modified Internal Rate of Return formula is defined as a financial metric used to evaluate the profitability of an investment or project. Modified Internal Rate of Return is denoted by MIRR symbol.

How to calculate Modified Internal Rate of Return using this online calculator? To use this online calculator for Modified Internal Rate of Return, enter Present Value (PV), Cash Outlay (PVO), Number of Years (t) & Interest (I) and hit the calculate button. Here is how the Modified Internal Rate of Return calculation can be explained with given input values -> 6.608738 = 3*((10/972.13)^(1/5)*(1+7)-1).

FAQ

What is Modified Internal Rate of Return?
The Modified Internal Rate of Return formula is defined as a financial metric used to evaluate the profitability of an investment or project and is represented as MIRR = 3*((PV/PVO)^(1/t)*(1+I)-1) or Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1). The present value of the annuity is the value that determines the value of a series of future periodic payments at a given time, Cash Outlay refers to the actual expenditure or payment of cash for a particular purpose, investment, or expense, The number of years is the total period for which the certificate of deposit is done & Interest is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
How to calculate Modified Internal Rate of Return?
The Modified Internal Rate of Return formula is defined as a financial metric used to evaluate the profitability of an investment or project is calculated using Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1). To calculate Modified Internal Rate of Return, you need Present Value (PV), Cash Outlay (PVO), Number of Years (t) & Interest (I). With our tool, you need to enter the respective value for Present Value, Cash Outlay, Number of Years & Interest and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
Let Others Know
Facebook
Twitter
Reddit
LinkedIn
Email
WhatsApp
Copied!