Setting Inheritance and Propagation flags with set-acl and powershell

Here's a table to help find the required flags for different permission combinations.

    ╔═════════════╦═════════════╦═══════════════════════════════╦════════════════════════╦══════════════════╦═══════════════════════╦═════════════╦═════════════╗
    ║             ║ folder only ║ folder, sub-folders and files ║ folder and sub-folders ║ folder and files ║ sub-folders and files ║ sub-folders ║    files    ║
    ╠═════════════╬═════════════╬═══════════════════════════════╬════════════════════════╬══════════════════╬═══════════════════════╬═════════════╬═════════════╣
    ║ Propagation ║ none        ║ none                          ║ none                   ║ none             ║ InheritOnly           ║ InheritOnly ║ InheritOnly ║
    ║ Inheritance ║ none        ║ Container|Object              ║ Container              ║ Object           ║ Container|Object      ║ Container   ║ Object      ║
    ╚═════════════╩═════════════╩═══════════════════════════════╩════════════════════════╩══════════════════╩═══════════════════════╩═════════════╩═════════════╝

So, as David said, you'll want

InheritanceFlags.ContainerInherit | InheritanceFlags.ObjectInherit
PropagationFlags.None

I think your answer can be found on this page. From the page:

This Folder, Subfolders and Files:

InheritanceFlags.ContainerInherit | InheritanceFlags.ObjectInherit 
PropagationFlags.None

Here's some succinct Powershell code to apply new permissions to a folder by modifying it's existing ACL (Access Control List).

# Get the ACL for an existing folder
$existingAcl = Get-Acl -Path 'C:\DemoFolder'

# Set the permissions that you want to apply to the folder
$permissions = $env:username, 'Read,Modify', 'ContainerInherit,ObjectInherit', 'None', 'Allow'

# Create a new FileSystemAccessRule object
$rule = New-Object -TypeName System.Security.AccessControl.FileSystemAccessRule -ArgumentList $permissions

# Modify the existing ACL to include the new rule
$existingAcl.SetAccessRule($rule)

# Apply the modified access rule to the folder
$existingAcl | Set-Acl -Path 'C:\DemoFolder'

Each of the values in the $permissions variable list pertain to the parameters of this constructor for the FileSystemAccessRule class.

Courtesy of this page.