what am I doing wrong here

You are trying to modify 5, 6, and 7. It's a good thing Perl does not let you, or math would be a tricky thing to do.

You might want to make some copies, somewhere or other. Since your function is returning values, you probably don't want it to also change the input values, and so I would choose to make the copies there:

my @area = &circ_area(5,6,7);
foreach (@area) {
    print $_ . "\n";
}

sub circ_area {
    my @x = @_; # the copy is writable!
    foreach (@x) {
         $_= 3.14 * ($_**2); # so this works!
    }
    return (@x)
}
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You're trying to modify read-only values (as Perl has no doubt told you).

Inside your subroutine, @_ contains three values (5, 6 and 7). But they aren't just values, they are the constants 5, 6 and seven. And in the foreach loop, $_ is aliases to each of those constants in turn. So when you try to assign a new value to $_, you are trying to overwrite the value of a constant. Which Perl, very sensibly, prevents you from doing.

What you really want is something like this:

sub circ_area {
  my @radii = @_; # copies values into a variable

  foreach (@radii) {
    $_= 3.14 * ($_**2);
  }

  return @radii;
}
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Or, more Perlishly:

sub circ_area {
  return map { 3.14 * ($_**2) } @_;
}
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The error message tells you

Modification of a read-only value attempted

So re-write it:

#!/bin/perl
use strict;
use warnings;

my @vals = ( 5, 6, 7 );

my @area = &circ_area( @vals );
foreach (@area)
{
          print $_ . "\n";
}

sub circ_area
{
    foreach (@_)
    {
         $_= 3.14 * ($_**2);
    }
    return (@_)
}
[download]

But since you're modifying the @_ var ... you really don't need to return it ... you're just needlessly copying the data.

#!/bin/perl
use strict;
use warnings;

my @vals = ( 5, 6, 7 );

&circ_area( @vals );
foreach (@vals)
{
          print $_ . "\n";
}

sub circ_area
{
    foreach (@_)
    {
         $_= 3.14 * ($_**2);
    }
}
[download]

It'd be helpful if you showed any error messages or explained what you got vs what you expected to get.

You seem to be using the parameters to circ_area as rvalues when you modify each parameter in turn. This will modify the original values as passed in, except that those values are constants and not modifyable. Then you return them - so that's just confusing. Why modify in place, and then return new copies?

Also, you don't need the &. So get rid of it.

Option 1:

my @area = (5,6,7);
circ_area(@area);
# rest as-is
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Option 2:

# rest as-is
sub circ_area
{
  map { 3.14 * ($_ ** 2) } @_;
}
[download]