To intentionally use a Circular Reference:
In this example, a Value-added tax (VAT) gross-up formula is in cell B1 (the formula is =B3-B2).
1. In cell A2, enter the VAT percent (%) 0.20.
2. In cell B2, insert the formula =A2*B1 to calculate the VAT amount.
3. Click OK to dismiss the circular reference warning.
4. In cell B3, enter 100. A Circular Reference is created in cell B1. The calculation of the amount without VAT is conditioned upon the calculation of VAT in cell B2.
Excel allows defining the number of iterations (that is, the number of times the formula is calculated) performed to resolve a circular reference.
To allow iteration and set the maximum iteration numbers:
1. Select File -> Excel Options -> Formulas.
2. Click Enable Iterative calculation checkbox and set the Maximum Iterations.
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