Syntax error Difference between internal rate of return and modified internal rate of return.

Difference between internal rate of return and modified internal rate of return.

The major differences between internal rate of return (IRR) and modified internal rate of return are as follows −

Internal rate of return (IRR)

  • Calculates discount rate based on internal factors.
  • NPV = 0.
  • Cash flows are Reinvested at project’s IRR.
  • Provides two solutions.
  • Less accurate.
  • Higher than MIRR.
  • Low precision.

Modified internal rate of return

  • Cost of capital is used in calculations.
  • NPV = investment (outflow).
  • Cash flows are reinvested at firm rate of return.
  • Provides one solution.
  • More accurate.
  • More realistic than IRR.
  • High precision.
Updated on: 2020-09-26T13:41:14+05:30

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