40km seems to be the limit in which ships "exist" around you. I passed a destroyer then shortly thereafter a German steamer heading back the way I came. I switched to external camera, set it to 32x TC and followed the steamer to see if the destroyer would attack it. After a while the ship simply disappeared! No where to be found, the camera was 40km away from the sub at that point. So... either it's a game limit or a camera limit? Not sure.
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