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. For example, if you have a $1,000 inflow in year 1 and a $2,000 inflow in year 2, you would calculate the future value of the $1,000 for two years and add it to the $2,000.
Determining MIRR From Positive Cash Flows on BA II Plus
The formula requires you to take the Nth root of the ratio of FV to PV, where N is the total number of periods. 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.
You will use the BA II Plus TVM solver to input each cash flow's value and its respective number of periods, calculating the future value at the specified reinvestment rate. 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.
Determine MIRR From Positive Cash Flows Using the BA II Plus TVM Solver
This step answers the question: "What is the total cost of the project today, accounting for the time value of money?" Step 3: Solving for the MIRR With the future value of inflows (FV) and the present value of outflows (PV) calculated, you can now determine the MIRR. These are typically the initial investment or subsequent costs.
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