Choice "C" is correct. Whenever depreciation protects income from taxation, it is known as a depreciation tax shield.
Choice "a" is incorrect. A depreciation tax shield may result in after-tax cash inflow, but not outflow.
Choice "b" is incorrect, per above.
Choice "d" is incorrect. A depreciation tax shield is caused by the tax deductibility of the depreciation expense, not by the fact that depreciation does not affect cash flow.
