is the rate of return which equates the initial investment with the terminal value, where the terminal value is the future value of the cash inflows compounded at the required rate of return (the opportunity cost of capital).

MIRR is a variant of IRR which has several advantages including a single answer and a more sensible reinvestment assumption.... more on: Modified internal rate of return

The interest rate at which the project's present value of investment costs equal the project's terminal value of net cash flows. An acceptable capital budgeting project has a modified internal rate of return greater than the required rate of return.

An alternative to conventional Internal Rate of Return (IRR). IRR will usually will fail to yield a result in a situation where there are negative cash flows. The MIRR calculation takes any negative cash flows, zeroes them out and discounts them at a safe rate back to day one of the investment period. The discounted amount is treated as additional capital needed on day one. MIRR also takes positive cash flows and compounds them forward to the sale year, using the reinvestment rate (also known as the risk rate).

A variant of the internal rate of return, intended to eliminate the multiple root problem by discounting all negative cash flows back to the time an investment commitment must be made and by compounding all positive cash flows forward to the end of the final year of the investment holding period. The modified internal rate of return is the discount rate that equates the present value of all negative cash flows with the future value of all positive cash flows.

See adjusted internal rate of return.

MIRR is a variant of IRR which has some advantages. MIRR gives a single answer compared with the IRR which may give multiple answers.... more on Modified internal rate of return

Modified Internal Rate of Return (MIRR) is a financial measure used to determine the attractiveness of an investment. It is generally used as part of a capital budgeting process to rank various alternative choices. As the name implies, MIRR is a modification of the financial measure Internal Rate of Return (IRR).