Equation 3.4 is the standard relationship between the price of a fixed-income bond, PV, and its yield to maturity, y. The evenly spaced coupon payments of PMT each period and principal redemption of FV are discounted over the N periods to maturity. That equation is rewritten here.
The present value of the stream of coupon payments, in brackets, is the sum of a finite geometric series. Define that to be SUM.
Divide both sides of this equation by (1 + y).