United States treasury bonds: are they the appropriate benchmark for investment decisions?

Managers making investment decisions, frequently compare the expected return on investment (ROI) of a proposed project to the return currently available of United States Long Term (30 year) Treasury Bonds. The Treasury return is assumed to be risk free and therefore a proposed investment, to be accepted, must provide this return plus a risk premium proportional to the perceived greater risk of the project. This frequent usage of the 30 year Treasury as a risk free benchmark piqued the authors' curiosity, and they began their investigation into fluctuations in the yield, and hence, prices on a historical basis. They collected historical data on yields for the 1798-1996 period, almost 200 years. A cursory review of the results provided several surprises.