Using the weighted average cost of capital (WACC)of another firm,one which is focused on the type of project you are considering,rather than using your own firm's WACC is called the:

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The approach described in the question is called the pure play approach, which involves using the WACC of another firm that is solely focused on the type of project being considered. This approach is considered the best choice because it provides a more accurate estimate of the project's cost of capital since it takes into account industry-specific risks and market conditions that may be specific to the project. Using a competitor's WACC or a divisional approach may not capture these specific risks and conditions, while an insider's look or project divisor is not a recognized approach for estimating WACC.

Using the Weighted Average Cost of Capital (WACC)of Another Firm,one