Limni Co Jun 13

To gross it up for the extra 6% tax (25% - 20%).

25-20 is 5% but why 6%?

I mistyped - it is 26% - 20% Those are the two tax rates given in the question!!

whats the reason behind grossing up we can just do 10.422/(15m-0.9).. Also if are grossing up.. why arent we doing full gross up that is 10.422/ 0.74 ( accpunting for 26% of the tax ?

The question makes it clear that full credit is given for tax already paid. Thy have already paid tax at 20% and therefore just have to pay the extra 6%. Therefore for every $100 received in remittances they will only end up with a net $94. Or, putting it the other way round, for every increase in dividend capacity of $94 they need to have received $100 in remittances.