Explanation

Multiple of Invested Capital (MOIC) is a key performance metric in private equity and alternative investments that measures the total value returned relative to the total capital invested.

Key points about MOIC:

1. MOIC Formula: MOIC = (Realized Value + Unrealized Value) / Total Capital Invested

2. Components considered:

   • Realized value: Cash distributions or proceeds received from the investment
   • Residual asset value (unrealized value): The current estimated value of remaining holdings

3. Why Option C is correct: MOIC accounts for both realized returns (actual cash received) and unrealized returns (remaining asset value), providing a comprehensive view of investment performance.

4. Comparison with other metrics:

   • MOIC doesn't consider the time value of money (unlike IRR)
   • It's a simple multiple that shows how many times the investment has grown
   • Commonly used alongside IRR in private equity performance reporting

Example: If an investor puts $10 million into a private equity fund, receives $5 million in distributions, and the remaining holdings are valued at $12 million, the MOIC would be: MOIC = ($5 million + $12 million) / $10 million = 1.7x

This means the investment has generated 1.7 times the original capital invested.