A variation of this metric, called the modified internal rate of return (MIRR), compensates for this flaw and gives managers more control over the assumed reinvestment rate from future cash flows.

Definition of 'Modified Internal Rate of Return' The rate of return which equates the initial investment with a projects terminal value, where the terminal value is the future val ...

Modified internal rate of return (MIRR) is used to assess the cost and profitability of a future project for a company. Unlike the standard internal rate of return (IRR), MIRR assumes that positive ...

Learn what the modified internal rate of return (MIRR) is, how to calculate it, and how to use it to improve your capital budgeting decisions.

Additionally, you may want to use other methods, such as the modified internal rate of return (MIRR) or the profitability index (PI), that overcome some of the flaws of the IRR method.

From there, you can determine a project's internal rate of return and weigh if that rate is worth pursuing. Here's an example: Say you're on the fence about purchasing a $100,000 piece of equipment.

What does IRR tell traders? IRR tells traders the projected rate of growth that a company is likely to experience following a project. A high IRR means that a project is likely to be good for growth ...

From there, you can determine a project's internal rate of return and weigh if that rate is worth pursuing. Here's an example: Say you're on the fence about purchasing a $100,000 piece of equipment.