Which metric is specifically designed to measure the return landscape over the holding period of an investment?

The Internal Rate of Return (IRR) is specifically designed to measure the return landscape over the holding period of an investment by determining the annualized effective compounded return rate that can be earned on the invested capital. It reflects the time value of money, incorporating all cash inflows and outflows throughout the duration of the investment, providing a comprehensive view of profitability over time.

In contrast, cash-on-cash return focuses strictly on the cash generated relative to the cash invested without considering the timing of cash flows. Distribution to Paid-In Capital (DPI) measures the amount returned to investors in relation to their total capital contributions but does not capture the timing or the potential growth of the investment. Multiple on Invested Capital (MOIC) expresses the total value returned relative to the amount invested but again lacks consideration for when those returns are realized. Thus, while all metrics provide insights into investment performance, IRR uniquely incorporates the timing of cash flows, making it the most relevant for assessing the entire holding period's return landscape.