Microsoft KB Archive/76359

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Change in finance_rate Argument Doesn't Affect MIRR Result

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The information in this article applies to:


 * Microsoft Excel for Windows, versions 2.x, 3.0, 4.0, 5.0
 * Microsoft Excel for OS/2, versions 2.2, 3.0
 * Microsoft Excel for the Macintosh, versions 3.0, 4.0, 5.0

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SUMMARY
When using the MIRR function in Microsoft Excel, the value for the finance_rate argument can be changed to any value. It will not affect the result for an investment with only one change in sign for the cash flows. This is by design and is consistent with the formula for the Modified Internal Rate of Return (MIRR).

MORE INFORMATION
The MIRR function requires the following arguments:

  MIRR(values,finance_rate,reinvest_rate)

It also requires values that have at least one change in sign. It is ideally used for investments with values with two or more changes in sign.

Steps to Reproduce Behavior
  Type this example into a worksheet:

     A1:  -120,000 A2:   39,000 A3:   30,000 A4:   21,000 A5:   37,000 A6:   46,000 A7: =MIRR(A1:A6,10%,12%).  12.61% is displayed when the cell is formatted with number format 0.00%. Now change the 10% to a different value such as 5%. The result of 12.61% will not change.

A change in the value of the finance_rate argument will only affect the result of the MIRR function for an investment with multiple changes in the signs of the cash flows.