the MM extension with growth, the appropriate discount rate for the tax shield is the unlevered cost of equity.

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According to the MM extension with growth, the appropriate discount rate for the tax shield is the unlevered cost of equity. This is because the tax shield is a result of debt financing and does not depend on the firm's leverage. Therefore, the cost of debt does not need to be incorporated into the discount rate for the tax shield.

The MM Extension with Growth, the Appropriate Discount Rate for the Tax