MIRR
Business & Finance abbreviation · Finance
| Stands for | Modified internal rate of return |
|---|---|
| Categories | Business & Finance |
MIRR stands for Modified internal rate of return, a finance abbreviation.
Variant of IRR that assumes positive cash flows are reinvested at a specified rate, usually the cost of capital, and that outflows are financed at a set rate. The result is a single, usually more conservative, annual return figure.
Example: The project's IRR looks like 32 percent, but its MIRR at a 9 percent reinvestment rate is only 18 percent.
Usage notes
MIRR solves two problems with IRR: the possibility of multiple answers when cash flows change sign and the unrealistic assumption that interim cash earns the IRR. Excel provides an MIRR function that takes both a finance rate and a reinvestment rate. Despite its advantages, MIRR is used far less often than IRR in practice.
Related abbreviations
More finance abbreviations
- LOI – Letter of intent
- LP – Limited partner
- LTM – Last twelve months
- M&A – Mergers and acquisitions
- MAC – Material adverse change
- MBO – Management buyout
- MOIC – Multiple on invested capital
- MRR – Monthly recurring revenue
- NewCo – New company
- NOPAT – Net operating profit after tax
- NPV – Net present value
- NTM – Next twelve months