Capital leases when calculating for Enterprise Value and Equity Value
I've moved from VC to PE as an analyst - essentially, from valuating small startups w/o debt, NWC,valuation of large capex, debt, .
Currently, on PE side I'm doing DCF for a university-startup which will start operating from next year. It has just signed $25mln worth capital lease agreements with payments starting in 2 years. Also, some part of investor's money, circa $7mln, is going to be invested in constructing 1 more building. There's no existing debt or cash atm.
1) Am I doing it right when substructing/accounting for the interest part of my capital lease from operating cash flows and then substracting principal payments of my capital lease (which are in my investing cash activities) as capex when arriving to my FCFF?
2) Do I need to include $7mln new capex in my FCFF calculation for pre-money valuation? As there's no cash to finance this at this stage and the investor's money is not in, does it even make sense?
3) How do I arrive toif I don't have debt and what part of lease liability is substracted from should be substracted? Since I already accounted for lease interest in my operating cash flow and my lease principal as capex when arriving to FCFF, what part of lease is substracted from EV if any? Once I identify what I need to substract from my EV, do I need to discount it before substracting?
Guys, I know these questions may sounds absolutely obvious to some of you but it's my first experience with any capital lease. Will appreciate a prompt response from you all.