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You need a tach.

The diameter is too small and the pitch too much for that gear ratio.

Your engine has a gear ratio of 1.64 and a WOT rpm of 5500. With a target speed of 40, you will need a 13" pitch prop.

Now given that all props have different blade design and sizing is not universal, the specific models of prop to choose are important.

Whaler owners running a Mercury 60hp, 2-stroke recommend Stilleto and Vengeance models. I would start there, after you get a tach.

Also - The engine should be mounted 2 holes up. Top bolt in the 3rd bracket hole down from the top.