Well, sometimes I shoot like 5 rounds at the waterline of a merchant, nothing happens in the immediate time. But if you wait the ship then sinks about an hour or some time later (this with realistic sinking activated). With time compression you can see them sitting lower and lower on the water slowly, they end up sinking after some time.
I guess it's not that incorrect (sometimes there were ships that took entire days to sink) but don't really know about torpedo damage.
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