In real-world finance, investments and cash flows rarely happen on a fixed monthly or annual schedule. Payments and returns often occur at irregular intervals, making simple IRR calculations unreliable. This is where Excel’s XIRR function comes in—a powerful tool for computing the true annualized rate of return when cash flows do not occur at regular periods.

MIRR stands for Modified Internal Rate of Return. It improves the traditional IRR by assuming reinvestment at a realistic rate (not at the IRR itself) and separately considering borrowing costs. MIRR gives a more accurate picture of an investment’s profitability.

The IRR function in Excel calculates the Internal Rate of Return for a series of cash flows (payments and income).It is used heavily in finance and investment analysis to measure and compare the profitability of different projects or investments. In simple words:IRR tells you how profitable your investment is, shown as a percentage