Understanding the MIRR Calculation Methodology The MIRR is a refined version of the traditional Internal Rate of Return (IRR) that assumes positive cash flows are reinvested at the firm's cost of capital, and that the initial outlays are financed at the firm's financing cost. On the BA II Plus, you input the FV as a positive number and PV as a negative number into the TVM solver, set N to the project duration, and then press the "CPT" and "I/Y" keys to solve for the interest rate, which is your MIRR.
Efficient MIRR Calculation on BA II Plus: A Step-by-Step Approach
This step effectively answers the question: "What is the total value of all cash inflows at the end of the project if they are invested at the cost of capital?" Handling Multiple Cash Flows If your project has multiple positive cash flows at different points in time, you must calculate the future value of each one individually. To calculate the Modified Internal Rate of Return (MIRR) on a BA II Plus, you first need to understand that this financial calculator does not have a dedicated MIRR key.
Step 1: Calculating the Future Value of Inflows The first step requires you to take all positive cash flows (inflows) and compound them forward to the end of the project's life. Practical Example and Data Entry.
Efficient MIRR Calculation on BA II Plus: A Step-by-Step Approach
You will discount these amounts back to the present (time zero) using the financing rate. The process involves determining the future value of positive cash flows and the present value of negative cash flows, then using those results to solve for the MIRR.
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