Type 3 valuation

Hi Sir

Hope you are fine.

To start with, thank you a lot for your help in assisting us with our queries and never ending questions. As the exam is approaching, I got some doubt on valuation questions.

I do understand the theoretical aspects of type 1 2 and 3 valuations. However, I do have some difficulties in identifying whether it is a type 2 or 3 and then to proceed with the question. Will the question state whether it is a type 3?

For type 2 I’m okay with as only the financial risk is changing and I have to use APV. But for type 3, how do I know whether there is a change in the business risk also?

Thanks
Yaaseen