Assuming that you mean David Hager's XMIRR routine, he said:
MIRR functions. This formula returns the internal rate of return for a
schedule of cash flows that is not necessarily periodic while considering
both the cost of the investment and the interest received on reinvestment of
cash."
http://www.j-walk.com/ss/excel/eee/eee017.txt
Isn't that a good enough explanation?
And next time, Pushkar, please remember to ask the question in the body of
the message, not just in the subject line.
--
David Biddulph