El Capitan - Right Click Menu - Open Terminal Here

As already mentioned in comments, using the built in service definitely works for folders. As for files, if you were to open them in finder, nothing would happen unless you can first established default editors in your .bash_profile.

If you're not dead set on using the right click menu, one way to open a folder location or file with terminal without downloading additional software would be to drag a file or folder onto your Terminal icon in the Dock. I do this often and it works great.

Here is a small tool that will do the job: https://github.com/qparis/FinderOpenTerminal

As an addition You can add alias in Your .bash_profile:

alias cdf="eval \"cd \\\"\\\`osascript -e 'tell app \\\\\\\"Finder\\\\\\\" to return the POSIX path of (target of window 1 as alias)'\\\`\\\"\""

This will not solve your problem, but You can use existing Terminal window and cd to selected directory in Finder by cdf command.