A firm is considering investing in a new piece of equipment. The equipment would cost $$500,000$ and would have shipping and installation cost of $$125,000.$ If purchased, the machine would have an estimated useful life of $5$ years and would be depreciated via a $5-$year MACRS schedule $($i$.$e$.,20\mathrm{.}0\%,32\mathrm{.}0\%,19\mathrm{.}2\%,11\mathrm{.}5\%,11\mathrm{.}5\%,$ and $5\mathrm{.}8\%).$ Adoption of the project would also require an increase in working capital of $$50,000.$ If the new equipment is purchased, an old piece of equipment $($which is still useable for $5$ more years$)$ could be sold for $$30,000.$ The old machine had been depreciated on a straight line basis and currently has a book value of zero.

The machine would generate annual incremental revenues of $$250,000$ and annual incremental expenses of $$50,000.$ It is estimated that the machine can be sold as scrap at the end of its $5$ year useful life for $$80,000.$ The required return on projects of this nature is $14\%$ and the firm$$s marginal tax rate is $40\%.$

What is cash flow from the project for year $1?$

$$45,000$

$$75,000$

$$125,000$

$$170,000$