The managers of Monte Vista Co. use the firm's weighted average cost of capital (WACC) as the required return for projects similar to those of the firm's existing operations. For projects of higher risk, they use a rate equal to WACC plus 2.5 percent. For projects of lower risk, they subtract 1.5 percent from the WACC. Which approach is the firm using to determine the required return for a project?

A. Pure Play

B. Beta Adjustment

C. Systematic

D. Subjective