Derive (3) from (1) please.

The original equations for (Net) Present Value of all streams of even cash flows: NPV = CF_0 + CF_1/(1 + r)^1 + CF_2/(1 + r)^2 + ... + CF_N/(1 + r)^N + ... NPV = (PMT) + PMT/(1 + r)^1 + PMT/(1 + r)^2 + ... + PMT/(1 + r)^N + ... However, we have "short-cut" formulas for cash flow streams with even cash flows of equal amounts: Annuity Due with N payments in N years happening at the beginning of each year PV (A. Due) = PMT * (1 + r) * [1/r - 1/r*(1 + r)^N] or PV(A. Due) = PMT/r * (1 + r) * [(1 + r)^N - 1]