Distance is not updated in the sh3 and real life TDC used in u-boats. Contrasty of the TDC used in the fleet boats and in SH4.
But, I think, if the other variables are right, the distance will not matter per see, since if the target is 2km, torpedo time to get hit would be 2m (roughly speaking and for example), but if the distance is less or more, it would just take less or more for you see the hit.
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