Exhaust size for small block?

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No problem. I understand. It's a bit un-nerving to tread in someplaces.
 
What intake is that? A single or dual plane? If it's a single plane it's another problem added to being over cammed and over geared. You need a dual plane for that little engine. 2-1/2" exhaust would probably be better for you also but 3" isn't going to kill things.

Also never take those computer dyno's as THE WORD. You have to input every parameter exactly perfect for them to be close to right. Then the engine needs dyno tuned also to get every bit out of it. Then a dyno program has a chance of being right.

BTW: That 727 IS a stronger and better transmission than a 904 but it will suck even more power out of your engine due to more rotating mass. When I say it is stronger that doesn't mean the 904 is a weak transmission by any means and in your case I'd do my best to find another 904 to put back in it rather than use a 727.
 
I didn't catch what carb you're running or what kind of ¼ times you're looking for. Some may say you should run a 750 cfm, but I'm inclined to recommend something in the 600-650 cfm range with an air valve secondary for use with an automatic. The smaller carb will definitely give you better throttle response and the vacuum secondaries won't open up until the engine can use the backside of the carb.

You may want to consider 3" to the muffer and 2½" to the outlet on your exhaust. The smaller tail pipe will help keep exhaust velocities up, which will help with scavenging off the engine a little. (Or a 2½ - 2¼ if 3" is too big)
 
The sprag was ripped out of the 904 by a mini neutral slam that was not intended, so im kinda gun shy about 904's the converter I had in the 904 was a 2800 stall 11in turbo action. The only reason im going with a 727 is its a more reliable transmission or so I hear, it will still be a 11in converter but a 3200 stall. Before the trans. crapped out on me I had the car out at a 30mph roll and I was fairly impressed so I know its making power I just need to change a few things. I am hoping that the exhaust is ok the way it is, I guess I will find out in the spring time.

Hmm, 11" stall for a 318. My opinion is at least a 10 inch loose converter for that cam in a 318. I have seen 11 inch converters with a so called stall, not work as well as a 10 inch with a similar rating. But maybe was just cheap converters.
First thing I'd change as said would be the gears. 4.10, at minimum 3.91.
I wouldn't be worrying about the exhaust.
 
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