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Default Specifying number of decimals in a number

When I type a number say 123.45678 and specify 3 decimals using Format -
cells - Number Tab - Number category my result is 123.457. I believe it
should have been 123.456. Like wise if I specify 4 decimals I get 123.4568
instead of 123.4567. What am I doing wrong? I am using Excel 2003 SP 2
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Thanks
Allen
 
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