Merge pull request #29 from lazarospsa/ModifiedInternalRateOfReturn

Modified internal rate of return

gofin.go

@@ -250,6 +250,22 @@ func PresentValuePerpetuity(interestRate, cashFlow float64) float64 {
 	return cashFlow / interestRate
 }
 
+// ModifiedInternalRateOfReturn calculates the Modified Internal Rate of Return (MIRR)
+func ModifiedInternalRateOfReturn(initialInvestment float64, cashOutflows []float64, cashInflows []float64, financeRate float64) float64 {
+	npvOutflows := -initialInvestment
+	for i, cashOutflow := range cashOutflows {
+		npvOutflows += cashOutflow / math.Pow(1+financeRate, float64(i+1))
+	}
+
+	npvInflows := 0.0
+	for i, cashInflow := range cashInflows {
+		npvInflows += cashInflow / math.Pow(1+financeRate, float64(i+1))
+	}
+
+	mirr := math.Pow((npvInflows / -npvOutflows), 1/float64(len(cashOutflows))) - 1
+	return mirr
+}
+
 // PresentValuePerpetuityDue returns the present value of a perpetuity due.
 // The present value of a perpetuity due is the cash flow divided by the discount rate multiplied by 1 plus the discount rate.
 // The interest rate must be greater than zero to avoid division by zero.

gofin_test.go

@@ -225,6 +225,20 @@ func TestPresentValuePerpetuityDue(t *testing.T) {
 	}
 }
 
+func TestModifiedInternalRateOfReturn(t *testing.T) {
+	var initialInvestment float64 = 1000
+	var cashOutflows []float64 = []float64{100, 100, 100, 100, 100}
+	var cashInflows []float64 = []float64{100, 100, 100, 100, 100}
+	var financeRate float64 = 0.1
+	var expected float64 = 0.1
+
+	actual := ModifiedInternalRateOfReturn(initialInvestment, cashOutflows, cashInflows, financeRate)
+
+	if compareFloat64(float64(actual), expected) {
+		t.Errorf("Test failed, expected: '%f', got: '%f'", expected, float64(actual))
+	}
+}
+
 func TestPresentValueGrowingPerpetuity(t *testing.T) {
 	var interestRate float64 = 0.1
 	var growthRate float64 = 0.1