Valuation question - capitalizing r&dO
Question for the valuation junkies out there:
I'm valuing a biotech firm and would like to capitalize r&d expenses.
How should this affect the DCF valuation?
I'm assuming that, in any given year (in the forecast period), I should:
-Add back R&D expense to EBIT
-Subtract R&D amortization from EBIT
-Assume taxes aren't affected
-R&D expense at t0 is subtracted from free cash flows (same treatment as CAPEX)
Am I forgetting anything?