Answer
Discounted payback is the time for a project's discounted cash inflows to recover the initial investment. It improves on simple payback by accounting for the time value of money, but still ignores cash flows after the payback point. It shows how long capital is at risk in present-value terms.
Real-world example Using discounted inflows, a project's payback extends from 3 to about 4 years once discounting is applied.