Facebook has reportedly turned down an investment that would have valued the fast-growing social networking startup at $4 billion. According to VentureBeat, Facebook CEO Mark Zuckerberg discussed the possibility of the funding at a recent board meeting, but concluded that they didn't need it.

The prospective $4 billion valuation raises questions of whether Microsoft overpaid for its stake in the company. In October 2007, the software giant invested $240 million in Facebook for a 1.7 percent stake, which placed a $15 billion valuation on the money-losing Internet startup. At the time, Microsoft's Kevin Johnson told The Wall Street Journal that company was "pleased with the economics of the deal."

But that was 2007 before the economy went south and the online ad market collapsed. However, there might be other factors at play.

Cnet reports that Microsoft invested as part of a preferred stock deal, noting that Facebook's true valuation to outsiders was never as high as $15 billion. It estimates that the valuation on the company now sits between $2 billion and $3 billion.

So where does that leave Microsoft's stake? That's a hard number to figure without knowing the exact terms of the deal and without an external investor -- the public markets or acquirer -- setting new terms. But it would be fascinating to know whether Microsoft's stake is worth more than the initial $240 million bet?

After all, no investor wants to see an investment under water.

Facebook has enough cash in the bank-- about $200 million -- to last for two years, VentureBeat's Anthony Ha reports.

More on the Facebook-Microsoft relationship from Todd Bishop, who offers an old family analogy to explain how these two companies get along.