TY - JOUR T1 - Beer Annuities: <em>Hold the Interest and Principal</em> JF - The Journal of Derivatives SP - 108 LP - 114 DO - 10.3905/jod.2017.24.4.108 VL - 24 IS - 4 AU - Carlos E. Ortiz AU - Charles A. Stone AU - Anne Zissu Y1 - 2017/05/31 UR - https://pm-research.com/content/24/4/108.abstract N2 - One of the newest ideas in finance is “crowdfunding.” This is an appeal through social media or other Internet platform to source funding via small investments from a large number of investors. In this article, the authors describe a partially crowdfunded capital project by a Belgian brewery that involved issuing a novel security. The funding helped finance a pipeline to transport beer from the company’s brewery to its bottling plant. Three classes of securities were issued, with the unusual feature that they pay off not in money but in beer. Each investor would receive a specified amount of beer per year for the rest of his or her life. The article develops a valuation model, which takes into account the terms of the contract, the current and expected future price of beer, and the life expectancy of the investor.TOPICS: Real assets/alternative investments/private equity, security analysis and valuation ER -