How to calculate payback period?

Mahalaxmi (job seeker) (1203 Points)

07 July 2013  

project cash outflow is 200000.net cash inflow =   

year                          1             2                 3                  4             5

 net cash inflow   99500    110000     96000       96000    68000                                                                                                        

 

payback period = 1 yr + 100500\110000 =1.91 yrs

my question is how payback period is calculated from  1 yr and why not 3 yr.and 2 yr