In a typical spreadsheet for economic evaluation, how should the inflation rate stored in cell F4 be accessed throughout the model?

Learn the essentials for your FE Mechanical exam. Study with our questions and explanations, designed to prepare you thoroughly for exam day.

The correct approach to accessing the inflation rate stored in cell F4 throughout a spreadsheet model is by using $F$4. This format is known as an absolute reference in spreadsheet applications like Excel.

Utilizing the absolute reference allows you to reference the inflation rate in cell F4 without altering the cell reference when you copy the formula to other cells. When you employ the $ symbol before the column letter and the row number, it locks both the column (F) and the row (4), ensuring that wherever the formula is copied or moved, it will always refer back to the inflation rate in that specific cell.

In contrast, using just F4 would result in a relative reference, which means if you copied the formula to another cell, it would adjust based on its new location. This could lead to referencing incorrect cells, which would undermine the accuracy of your economic evaluations. Similarly, the formats $F4 or %F4 would still adjust the row or be incorrectly formatted respectively, failing to achieve the desired fixed reference to the inflation rate.

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