modified internal rate of return (MIRR)

Definition

MIRR. A modification of another financial concept: the internal rate of return (IRR). Instead of assuming that a project's cash flows are to be invested at the IRR, MIRR assumes that the cash flows are instead invested at the firm's cost of capital (often its weighted average cost of capital). It is designed to better take into account what is done with cash flows once they are received.

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The modified internal rate of return was used as we wanted to take a more conservative analysis of the project.

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I wondered what the modified internal rate of return was and if it would work at being better than the thing that did its job previously.

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In order to determine the future value of one of the project cash flows, the administrator had to look at the modified internal rate of return to be able to take into account what the cash flow would look like when the current money was received.

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