IRR vs. MIRR- How are you using hear in your Analysis ??

2 Replies

I know a lot of investors use IRR in their analysis but I rarely see anything about MIRR. I would think since this calculation takes into account interest being paid versus the return received on investment income it would a good metric to use.

I would be interested to know if other investors use this formula and to what extent.

I ask because I was recently analyzing 10 unit here is Atlanta I received from an agent. The property is way over priced. However, I ran my analysis and the IRR was 32%, based on my max offer price. But the MIRR is 22%. Would anyone be concerned about the large difference between the two?

Any advice is appropriated.

All the Best,

Canesha

@Jaysen Medhurst

I think my issue with IRR is that it doesn't account for financing cost. Let's say I am reinvesting profits into similar projects producing the same 15% return. However, if I have to finance any part of the project the rate is being accounted for in the IRR equation. I feel this inflates the numbers.