First of all, I would double check that the difficulty target is really 1, if you're recalculating on every block, how does it handle the first block?
Update: The initial difficulty for peercoin is actually 256, but the calculations below can be tweaked to see it results in 55.5 hours at 5MH/s.
Time to solve a block
Here is a resource that might help: Generation Calculator. The calculation is:
Get the current target. Target for difficulty 1 (Bitcoin) is:
115792089237316195423570985008687907853269984665640564039457584007913129639935, which is the maximum value of a 256-bit number. You now have the probability of a single hash solving a block.
currentTarget / max256 = 2.33E-10
Take the reciprocal of the probability to get the average number of hashes to solve a block.
1/2.33E10 = 4.3E9
Divide the average number of hashes by your hash/s (not khash/s) to get the average number of seconds required to solve a block.
4.3E9 / 5E6 = 860 seconds or 14.3 minutes