There are also numerous adjustable diameter circle cutters on the market. You may also trace the outside diameter of the recessed can or make a 7 1/8" diameter template and use a "stab saw" to cut the circle by hand.

The tool I prefer and use daily is a roto zip with the circle cutter attachment. The attachement adjusts to a wide variety of diameters and the roto zip is very easy to control.

When cutting in sheetrock, the dust will go everywhere. A trick I’ve learned is to cut a basketball in half and slip it over the collar of the roto zip. This will contain the sheetrock dust in the bowl of the basketball while cutting your holes.

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You have a few options here.

You can buy a hole saw, that size will cost you between $40 and $50 at any Home Depot or Lowes. You can also draw the circle, start a pilot hole with a drill, then using a jig saw or reciprocating saw to cut the hole out. It wont be perfect, but still works, especially if you dont wanna fork over up to $50 for something you’ll only use once. Also there is a scoring tool, I forget what its called exactly, but can be found on the same aisle as where the recessd lighting is at, and also where the drill bits are too.

Anyways, best of luck.