Recall that WACC and therefore, the cost of debt is based on marginal, incremental borrowing rate. You are always trying to capture a "normalized" run-rate discount rate. The fact that you have NOL's (tax benefit) should be irrelevant because again, one is trying to capture normalized tax rate and therefore, NOL's should be effectively ignored for this calculation. The sole point being that the NOL's will run out. To properly reflect the benefit of NOL's in valuation purposes, figure out normalized, run-rate valuation and then add the NOL on a net PV basis. The rationale is that the discount rate reflects the risk of the company and shouldn't be distorted by NOLs until the very end. The other way to incorporate NOL's is through the construction of a detailed tax schedule reflecting both deferred tax assets and liabilities. The NOL's obviously shelter income and therefore result in increased profit and cash flow in your DCF analysis, but either way, the mat should work out the exact same.