When there is more than one sign change (positive to negative or negative to positive) in a series of cash flows, there could potentially be more than one IRR percent. The Modified Internal Rate of Return (MIRR) is sometimes offered, particularly in the real estate profession, as a way to recognize imperfect capital markets, in which reinvestment rates and requirements of liquidity limit the more stringent assumptions of IRR and NPV. The MIRR may provide a unique solution in cases where IRR might have multiple solutions (where more than one sign change of cash flows occurs).
This procedure uses specified reinvestment and borrowing rates. Negative cash flows are discounted at a "safe" rate that reflects the return on an investment in a liquid account. The figure generally used is a short-term security (T-bill) or bank passbook rate. Positive cash flows are reinvested at a "reinvestment" rate that reflects the return on an investment of comparable risk. An average rate of return on recent market investments might be used.