You are considering enrolling in a 2-year long on-line MBA program. You will continue your current employment. If you do, you must pay two payments of $30,000; the first happens today, at the beginning of the program, and the second is due 1 year from today, at the beginning of the second year. Because of this advanced degree, you expect your annual earnings stream will increase; this increase will occur after you complete the 2-year program. You plan on working for 30 years after you graduate. Remember that in capital budgeting, we assume that cash flows from the operations/activity happen at the end of the year.

To finance this program, you will withdraw money from your investment portfolio, which is currently earning an average of 7%. Thus, you have decided that any use of these funds should earn at least 7%.

What is the annual increase in earnings necessary to make this investment worthwhile? This annual increase in earnings can be treated as an annuity.

the answer given is:

Let increase in annual earnings be x

-PV of Costs+PV of Benefits from increased earnings=0

-30000-30000/1.07+x/7%*(1-1/1.07^30)*1/1.07^2=0

=>x=(30000+30000/1.07)*7%/(1-1/1.07^30)*1.07^2

=>x=5354.7248

my question: what formula is this? is this present value? just want to make sure I understand.