Advantage Software LLC                Real Estate Investment Analysis Software
                                    Modified Internal Rate of Return
 
 
 
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    Modified Internal Rate of Return - MIRR
 
 
  The On Target real estate investment software calculates both a modified internal rate of return     ( MIRR ) and an internal rate of return (IRR).  The IRR calculation can exaggerate the average return on an investment since it runs the cash flows forward at an internal rate, the same rate as the overall project.  If the IRR is 20% in year 10, the cash flows are ran forward at 20% for each year 1 through 10.  If the IRR  is 2%, the cash flows are ran forward at 2%. 

Because the IRR can exaggerate the average return on investment, the On Target software also calculates a modified internal rate of return. You determine at what rate the cash flows should be ran forward at based on how you will invest the cash flows.

The MIRR calculation uses the initial investment amount, a series of projected after-tax cash flows which are ran forward at a rate that you supply and the after-tax sales proceeds in a given year to calculate a Future Wealth dollar amount for years 1 through 10.   An average year-to-year return is then calculated using the initial investment amount and the future wealth dollar amount for each of the ten years.

MIRR Example:  If we are looking at year 5, we would use the initial investment amount, the series of after-tax cash flows for years 1 through 5, the after-tax return on the cash flows based on the interest rate that you supply and the after-tax sales proceeds in year 5 to calculate a future wealth dollar amount for year 5.  We then take your initial investment amount and the Future Wealth dollar amount that was calculated for year 5 and determine an average yearly return that would be required to accumulate the future wealth amount over the five year period.  The MIRR calculation provides a better average return estimate since you supply the anticipated rate of return to run the cash flows forward at.  The cash flows are not ran forward at an internal rate that could greatly exaggerate your return on investment.

The On Target real estate investment analysis software calculates both an internal rate of return and a modified internal rate of return.  Any top notch real estate investment software that you purchase should calculate an MIRR in addition to an IRR.  As we mentioned above, the IRR can exaggerate your average return.  When making a large investment, it is is important to have an accurate financial picture.  On Target gives you that advantage.  To order On Target for only $97.95, click on   Purchase Software   To find out more about the many features offered in the On Target  software, go to   Software Features   The On Target real estate software includes a 30 day money back guarantee and free support.

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