Increase Shareholder WealthBlack Thursday - Capital Expenditure RisksOctober is a month of ghouls, goblins and financial risks. Many of the worst stock market crashes occurred during this month, with October 24, 1929 designated Black Thursday. In 1929, most Americans kept their savings in banks rather than speculating in the stock market. Companies looking to increase their capital and their already wealthy patrons were the main investors of the era. "If you had $1,000 on 9/30/1929, it would have fallen to $108.14 on July 8, 1932, a loss of 89.2%. To recover from a loss like that, you'll have to watch your portfolio increase by 825%!” (Woodard, 2006). Although the stock market was only one of many factors contributing to the Depression, another often overlooked factor was factory machinery. In many cases, the condition of the equipment was outdated and deteriorating. Perhaps if businesses were more familiar with current capital budgeting analysis practices, they would have realized that wealth maximization depends on several factors. Fortunately, today's investors and businesses have more financial tools to compare and contrast capital expenditures and projects to achieve a return on investment. Using standard business economic analyses, based on solid research and numbers, a company can easily determine the current and future value of money, thereby minimizing risk while maximizing shareholder wealth. Although these are mainly two ways of raising capital, issuing shares and borrowing money, shareholders are always interested in increasing their potential investments. When a company produces all of the currently possible gadgets that the market will buy, other financial opportunities for retained earnings are considered. Capital expenditures take many forms, and the ideal situation will produce a high rate of return on investment, whether based on technological improvements or machines to produce more gadgets, or other monetary investments. “The rate of return rule states that organizations should invest in projects that provide a rate of return greater than the opportunity cost of capital, or the return that investors are currently getting from their investment in the company, without the new investment " (University of Phoenix, 2005). Using the net present value (NPV) of money, a business can mathematically calculate rates of return over time and opportunity costs. Additional financing rules also facilitate the analysis of capital expenditures (Ross, Westerfield and Jaffe, 2005).