Additionally, MIRR arrives at a single solution for any series of cash flows, while IRR can have two solutions for a series of cash flows that alternate between negative and positive. The Modified Internal Rate of Return (MIRR) allows you to set a different reinvestment rate for cash flows received. The standard Internal Rate of Return (IRR) assumes that all cash flows received from an investment are reinvested at the same rate. The Modified Internal Rate of Return (MIRR) is a function in Excel that takes into account the financing cost (cost of capital) and a reinvestment rate for cash flows from a project or company over the investment’s time horizon.
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