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the answer should be C. Assign User1 the read NTFS permission to Folder1
By default the DFS namespace system inherits permission from NTFS Permissions to determine if a user could see a published folder or not.
resource: https://docs.microsoft.com/en-us/windows-server/storage/dfs-namespaces/using-inherited-permissions-with-access-based-enumeration
Thanks to Avatar5kyFx and Coleman
answer is C