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  • 09-06-2021
  • Business
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Business executives often prefer to work with rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is:

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  • 09-06-2021

Answer:

Explanation:

MIRR equation is given by :

[(FV +ve cashflow / PV -ve cashflow)^(1/n)] - 1

FV +ve cashflow = Future value of positive cashflow at reinvestment rate

PV - ve cashflow = Present value of negative cashflow at finance rate

n = number of periods

The Modified Internal Rate of Return is a devised modification for the Internal rate of return, IRR which gives rate of return on percentage and overcomes the limitations of the IRR formula.

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