what is modified internal rate of return mirr 
the modified internal rate of return mirr assumes that positive cash flows are reinvested at the firm s cost of capital and that the initial outlays are financed at the firm s financing cost by contrast the traditional internal rate of return irr assumes the cash flows from a project are reinvested at the irr itself the mirr therefore more accurately reflects the cost and profitability of a project formula and calculation of mirrgiven the variables the formula for mirr is expressed as m i r r f v positive cash flows cost of capital p v initial outlays financing cost n 1 where f v c f c the future value of positive cash flows at the cost of capital for the company p v c f f c the present value of negative cash flows at the financing cost of the company n number of periods begin aligned mirr sqrt n frac fv text positive cash flows times text cost of capital pv text initial outlays times text financing cost 1 textbf where fvcf c text the future value of positive cash flows at the cost of capital for the company pvcf fc text the present value of negative cash flows at the financing cost of the company n text number of periods end aligned mirr npv initial outlays financing cost fv positive cash flows cost of capital 1where fvcf c the future value of positive cash flows at the cost of capital for the companypvcf fc the present value of negative cash flows at the financing cost of the companyn number of periods meanwhile the internal rate of return irr is a discount rate that makes the net present value npv of all cash flows from a particular project equal to zero both mirr and irr calculations rely on the formula for npv investopedia julie bang