# Modified Internal Rate of Return (MIRR)

I am considering the following project. The project has an up-front cost and will also generate the following subsequent cash flows:

t=1 $400, t=2 $500, t=3 $200

The project's payback is 1.5 years, and it has a cost of capital of 10 percent.

What is the project's modified internal rate of return (MIRR)?

© BrainMass Inc. brainmass.com June 3, 2020, 10:16 pm ad1c9bdddfhttps://brainmass.com/business/modified-internal-rate-of-return/modified-internal-rate-of-return-mirr-223164

#### Solution Preview

See attached Excel worksheet.

Step 1: Calculate the initial up front cost

payback period= 1.5 years

Therefore upfront cost= Year 1 cash flow + 0.5 x Year 2 cash flow= $650 =400+0.5*500

Thus the cash flow ...

#### Solution Summary

Calculates Modified Internal Rate of Return (MIRR) for a project.

$2.19