Risk free rate of return using treasury bill rate?
US treasury bills as risk free, just are not, although for very short terms we are fairly close. For longer terms, US treasury bills are a very high risk investment, because the yield is so low now that it has almost nowhere to go but up. If it goes up, the value of a long term note drops. The risk is probably higher with US treasury bonds than for the stock market right now and ever so much more as the term increases.
For a stock use the yield on the10-year treasury strip, zero coupng bond. Cash flows are usually discounted for ten years for stock valuation and a treasury strip removes the uncertainty of reinvestment rates. So the strip represents a riskless investment.. Otherwise use a treasury strip that matches the maturity of your investments cash flows.
