Firm valuation: tax shields and discount rates

This paper proposes a new setup of firm valuation within the DCF-methodology. This setup is based mainly on the fundamental equality at any time between the assets side and the liabilities side of the market value balance sheet. This model considers different discount rates (including cost of debt and tax shields rate) as variable functions of leverage and operating profitability of the firm and applies to any level of debt and to any cash flow pattern. The setup is fully dynamical and gives reasonable results.