MIRR and IRR

MIRR assumes reinvestment at the cost of capital; IRR assumes reinvestment at the IRR.

That is the difference (and obviously the calculations are different!)

Sir, lets say we are having non conventional cash flow in a project, say yr 0 1000 outflow yr 1 and 2 1500 inflow yr 3 500 outflow should the yr 3 500 outflow under investment phase or return phase?

For the exam you would treat it as part of the return phase (although it is unlikely to happen in the exam).