Adjusted Present Value

There is no consensus in finance literature as to how to find the present value of the tax shield. In their original article, Miller and Modigliani proposed to discount the tax shield at the risk free rate of return. Stewart Myers however proposed to discount the tax shield at the cost of debt.
Miles and Ezzels proposed to discount the tax shield at the opportunity cost of capital. Needless to say all these methods will give different values of the present value of tax shield and hence different value of the company.
In one of my ongoing research I find that the model proposed to find the present value of tax shield affects the way the opportunity cost of capital is found out. As of now almost everybody uses one of the following two ways to find the opportunity cost of capital:
a) ignore taxes and find the beta of assets as a weighted average of the beta of debt and equity,
b) use the model proposed by Robert Hamada.

Since the first method assumes the tax rate to be zero, it only yields an approximate value for the opportunity cost of capital. The second method is based on the MM I valuation equation in the presence of tax. However, this model assumes that the rupee value of debt remains fixed.

Therefore when we use the opportunity cost of capital using the Hamada equation it gives satisfactory answer only when we talk about a no-growth company.

In my research work I propose different methods to find the opportunity cost of capital depending on the valuation method used.