An investment banker is calculating diluted shares outstanding for the equity value bridge. The company has 50 million basic shares, 5 million stock options with a weighted average exercise price of $20 (current share price is $50), and 2 million restricted stock units (RSUs). Using the treasury stock method, approximately how many diluted shares are outstanding?

Why B — 55.0 million shares

Under the treasury stock method, the 5 million options generate proceeds of 5M x $20 = $100M, which could repurchase $100M / $50 = 2M shares. So the net dilution from options is 5M - 2M = 3M shares. RSUs are fully dilutive since they have no exercise price, adding 2M shares. Diluted shares = 50M + 3M + 2M = 55M shares. The treasury stock method is the standard approach used in investment banking to calculate diluted share counts for equity value calculations.