Does anyone know how to use AppPath properly?

I have created a setup file for my application and it will only work if users install it in a certain directory. I have been trying to use the $(AppPath) in the code and it simply won't work

E.G. I have a directory testfiles as a subdirectory of the installation directory.
At the moment in the code, I access files in that directory directly by c:\MyApplication\testfiles\whatever.file
but I would like a way to be able to access it as
(installation directory)\testfiles\whatever.file

I know this can be done using $(AppPath) but have not found the correct way of doing this.
Any of you out there got examples of how this can be done?

Thanks.