Define: MIRR

UK Accounting Glossary

Definition: MIRR


Quick Summary of MIRR


MIRR – modified investment rate of return is a financial tool that is used to determine the attractiveness of an investment.  MIRR is used in capital budgeting as a tool to rank investments of equal size.



What is the dictionary definition of MIRR?

Dictionary Definition


MIRR: Modified Internal Rate of Return.

The modified internal rate of return (MIRR) is a financial measure of an investment’s attractiveness. It is used in capital budgeting to rank alternative investments of equal size.


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Full Definition of MIRR


MIRR – modified investment rate of return is a financial tool that is used to determine the attractiveness of an investment.  MIRR is used in capital budgeting as a tool to rank investments of equal size. MIRR, the modified investment rate of return is the new (IRR) internal rate of return; as a result, it aims to solve the issues with the IRR.

Issues with the IRR

MIRR fixes two key issues with IRR, however, there are others that it still does not address.

Firstly, the IRR has been known to be misapplied. Often, people, will that short term positive cash flows become reinvested at the same rate of return that the project generating them is receiving. Usually, this is an unlikely scenario. Much more likely is that the money will be reinvested at a rate that is much closer to said companies cost of capital. Therefore, the IRR will often give an overly optimistic view of the projects that are under study.


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Cite Term


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Page URL
https://payrollheaven.com/define/mirr/
Modern Language Association (MLA):
MIRR. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 20, 2019 https://payrollheaven.com/define/mirr/.
Chicago Manual of Style (CMS):
MIRR. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/mirr/ (accessed: September 20, 2019).
American Psychological Association (APA):
MIRR. PayrollHeaven.com. Retrieved September 20, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/mirr/

Definition Sources


Definitions for MIRR are sourced/syndicated from:


This glossary post was last updated: 3rd June 2019.