Modified Internal Rate of Return | MIRR | FIN-Ed 

#fin-ed
Modified Internal Rate of Return | MIRR | FIN-Ed
This video is about how to calculate the modified internal rate of return or MIRR using a Texas BA II Plus financial calculator. MIRR is the discount rate at which the present value of a project’s costs is equal to the present value of its terminal value. Terminal value is defined as the sum of future values of all cash inflows. Some projects may have non-normal cash flows and, thus, may have multiple IRRs. In such a situation, project selection might be erroneous or misleading. In order to avoid multiple IRR problems, it is always better to use the MIRR technique while accepting or rejecting a project.
Example:
Your division is considering two projects with the following cash flows (in millions). If WACC is 10%, What are the projects’ MIRR and which project will you accept?
Source: Fundamentals of Financial Management (Concise Edition) Brigham and Houston
Chapter 11: The Basics of Capital Budgeting
Problem: 11-6
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