Final answer:
Subsequent expenditures normally capitalized are additions, improvements, and rearrangements, which help a firm in earning profits in the future, capitalizing on the investment made. Firms can fund these capital investments through investors, profits, loans, or stocks depending on various financial factors.
Step-by-step explanation:
The types of subsequent expenditures that are normally capitalized are additions, improvements, and rearrangements. Capitalization in this context refers to the accounting practice of recognizing a cost as a part of a fixed asset, rather than an expense that reduces income for the period. When subsequent expenditures provide future economic benefits, they are usually capitalized. Additions might be a new wing to a building, improvements could refer to the upgrading of a machine, and rearrangements might involve the cost of relocating assets that improve operational efficiency.
Firms make investment expenditures with the expectation of earning future profits. They can raise financial capital through various means, such as investors, reinvesting profits, borrowing, or selling stock. The choice depends on a myriad of factors, including but not limited to the expected rate of return, the cost of capital, and the nature of the investment.