The following is a description of an investment project:

Equipment will cost $$1,200,000$

Installation costs for the equipment are $$50,000$ and delivery costs are another $$25,000$

The equipment will be depreciated according to $5-$year MACRS

The economic life of the equipment is $7$ years after which the salvage value is expected to be $$400,000.$

A net working capital investment of $$75,000$ will be required. Half of the investment in net working capital is expected to be liquidated and returned to the company at the end of the project life in $7$ years.

The marginal tax rate $=25\%$

Compute the terminal nonoperating cash flow for this project for the end of year $7.$

$$375,000$

$$275,000$

$$337,500$

$$400,000$