Calculate the total present value of each of the cash flows, starting from period 1 (set the initial outlay to 0).Here are the steps in the algorithm that we will use: That means that we have to use a little ingenuity to calculate the MIRR. Unfortunately, financial calculators don't have an MIRR key like they have an IRR key. The modified internal rate of return (MIRR) solves this problem by using an explicit reinvestment rate. Therefore, the IRR can be misleadingly high at times. A good project may have an IRR that is considerably greater than any reasonable reinvestment assumption. The most important flaw is that it implicitly assumes that the cash flows will be reinvested for the life of the project at a rate that equals the IRR.
However, the IRR suffers from a couple of serious flaws. The IRR has been a popular metric for evaluating investments for many years - primarily due to the simplicity with which it can be interpreted. Example 4.2 - Modified Internal Rate of Return Enter the function as shown above and then press Enter to get the answer (19.5382%). To get the IRR function on the screen, press APPS and return to the finance menu, and scroll down until you see IRR(. NPV( Rate, Initial Outlay, part is optional and we will ignore it here, but it is in the FAQ. To find the present value of an uneven stream of cash flows, we need to use the NPV function. First, exit from the TVM Solver menu by pressing 2nd MODE and then press APPS and return to the finance menu. Still, you use what you've got, so lets plunge in. Its not too bad one you get used to it, but it is more difficult than necessary.
This is where the TI-84 Plus is considerably more difficult than most other financial calculators. Example 3 - Present Value of Uneven Cash Flows
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We will also see how to calculate net present value (NPV), internal rate of return (IRR), and the modified internal rate of return (MIRR). In this section we will take a look at how to use the TI 84 Plus to calculate the present and future values of uneven cash flow streams. In the previous section we looked at the basic time value of money keys and how to use them to calculate present and future value of lump sums and regular annuities.
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