For the problem below, can you please explain how and/or why the price of share affect the number of shares outstanding during the year? I believe the answer is 780,000 shares outstanding ( 500,000 x 6/12 ) + (1,000,000 x 6/12) + [ (35-28) / 35 ] x 150,000. I just need an explanation of why the bolded part of the equation is computed that way. thank you

Stine Inc. had 500,000 shares of common stock issued and outstanding at December 31, 2014. On July 1, 2015, an additional 500,000 shares were issued for cash. Stine also had stock options outstanding at the beginning and end of 2015 which allow the holders to purchase 150,000 shares of common stock at $28 per share. The average market price of Stine's common stock was $35 during 2015. The number of shares to be used in computing diluted earnings per share for 2015 is: