how do you factory reset time capsule

Read Resetting an AirPort base station FAQ - Apple Support

Power off the Time Capsule by pulling the power cord from the back of the device

Count to ten

Hold in the reset button on the back of the Time Capsule first......and keep holding it in for an additional 7 to 8 seconds while you simultaneously plug the power back into the Time Caspule

Release the reset button and allow a full minute for the Time Capsule restart

You are done