The assembly drawing calls out torque and a tolerance on that torque. The analyst must convert that torque to a preload for use in calculating stress.
I don't use the second equation, but you might use it first to obtain a preload, then calculate a torque from that, then apply the torque tolerance to calculate the limits on the preload.
In either case, design is an iterative process where the preload has to be large enough to prevent the joint from sliding or opening, but not so large as to cause yielding.