What is the likely effect of inflation on the level of capital expenditures made by private firms?

Question:

What is the likely effect of inflation on the level of capital expenditures made by private firms? What must the financial manager do to ensure that a firm’s procedures will be effective in an inflationary environment?

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...