Calculate Modified Internal Rate of Return (IRRM) for given cashflows, finance rate, and reinvestment rate. Get both periodic and annual interest rates.

Modified Internal Rate of Return (IRRM)

Purpose

The Modified Internal Rate of Return (IRRM) function helps you calculate the rate of return on an investment, taking into account both the initial investment and any additional cash flows.

Use Cases

You can use this function to determine the effective interest rate on an investment where cash flows are reinvested at a different rate than the initial investment.

How to Use

1. Enter the cash flows for the investment.
2. Specify the finance rate and reinvestment rate.
3. Click on the calculate button to get the results.

Input Values

1. Cashflow: The cash flows for the investment.
2. Description: The amount of money going in and out of the investment over time.
3. Finance Rate: The interest rate for the initial investment.
4. Description: The rate at which the initial investment grows.
5. Default unit is percent per year.
6. Reinvestment Rate: The interest rate for reinvesting cash flows.
7. Description: The rate at which the additional cash flows are reinvested.
8. Default unit is percent per year.

Output Values

1. Periodic Interest Rate: The modified internal rate of return.
2. Description: The rate of return on the investment, taking into account reinvestment of cash flows.
3. Annual Interest Rate: The annualized rate of return.
4. Description: The effective interest rate on the investment per year.

Any other Instruction

• Make sure to input all values accurately to get correct results.

Steps of Calculation

1. Convert input values to appropriate units.
2. Calculate the modified internal rate of return using the provided cash flows, finance rate, and reinvestment rate.
3. Convert the result to the desired frequency (e.g., yearly) for better understanding.

Technical Parameters

• cashflow_interval, cashflows, finance_rate, reinvestment_rate

Return Values

• Periodic Interest Rate, Annual Interest Rate

Example Expressions

You can use the following expressions to directly evaluate in a non-interactive manner using eva():

1. irrm(cashflows=[-40000, 5000, 8000, 12000, 30000], finance_rate='10 pct/yr', reinvestment_rate='12 pct/yr')
2. irrm(cashflows=[-20000, 3000, 5000, 8000, 20000], finance_rate='8 pct/yr', reinvestment_rate='10 pct/yr')

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