The main problem you'll have trying to do this in Word is that Word's table referencing formulae don't recognise text. Consequently, they can't test for 'High', 'Medium', or 'Low'. If your drop down box is a formfield dropdown in a document with forms protection applied, though (but not a content control dropdown), this is not an impediment. Assuming you are working with a formfield dropdown, the field code to do the calculation in Word is:
{IF{REF Dropdown1}= "High" {=B3/(1+B3*0.2^2)} {IF{REF Dropdown1}= "Medium" {=B3/(1+B3*0.1^2)} {IF{REF Dropdown1}= "Low" {=B3/(1+B3*0.05^2)} "FALSE"}}}
where Dropdown1 is the formfield dropdown's internal bookmark name and you set it's 'calculate on exit' property.

Note: The field brace pairs (i.e. '{ }') for the above example are all created in the document itself, via Ctrl-F9 (Cmd-F9 on a Mac); you can't simply type them or copy & paste them from this message. Nor is it practicable to add them via any of the standard Word dialogues. The spaces represented in the field construction are all required.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]