Discount rates relating to debt and tax savings

In APV, you can either discount the tax shield at the risk free rate or at the return on debt. There are good arguments for both, and the examiner always accepts either. I explain the arguments in my free lectures on APV, but you are never expected to explain them in the exam. With regard to the market value of debt, the flows should always be discounted at the investors required rate of return. There will always be information in the question enabling you to decide what that required return is.