The MIRR Adjusts the Conventional IRR Figure to Incorporate an Assumed

The MIRR adjusts the conventional IRR figure to incorporate an assumed reinvestment rate on interim cash inflows generated by an investment project.Proponents of the MIRR model maintain that the conventional IRR method implicitly assumes a reinvestment rate equal to the project's IRR,which (they maintain)is many times overly optimistic.Therefore,the MIRR provides an appropriate adjustment to account for an assumed (usually lower)rate of return on interim cash inflows.This can be demonstrated by the two calculations above: at an assumed