A venture with 2 million total common shares 1.4 million owned by the entrepreneur and 0.6 million by an angel investor had a postmoney value of $8 million after its last (and only) round of outside financing. The company has run into some development delays and needs to raise additional capital. A new investor offers $500,000 in exchange for 200,000 new common shares. 1. If there is no ratchet agreement, what will be the postmoney value after the $500,000 investment?

2. How much is the entrepreneur's stake worth after the $500,000 investment?