Readers, this article is pretty good, reminding us that pre-tax and post-tax discount rate is not the same.
I agree with the paper. The reason is simple. Debt creates value through tax savings. See the cashflows and value equations.
FCF + TS = CFE + CFD
V_unlevered + VTS = D + E
If you disregard taxes, you lose VTS
FCF = Free Cash Flows
TS = Cash Flow from Tax Shield
CFE = Cash Flow to/from the Equityholders
CFD = Cash Flow to/from the Debtholders
VTS = Value of Tax Shield
D = Debt (Book value)
E = Equity (Market value)