The flow of a propeller inside of a tunnel is addressed. A numerical method is developed in which the flow inside the tunnel is treated via a potential-based panel method. First, the method is applied to the two-dimensional flow of a hydrofoil inside of a tunnel. The total and the perturbation potential formulations are developed, and solved via a direct and an iterative method. The results from both formulations and solution schemes are found to converge very fast with number of panels and truncated tunnel length. Then, the perturbation potential formulation is applied to the analysis of the flow of a propeller inside of a tunnel. The propeller problem and the tunnel problem are solved separately, with the effects of one on the other being accounted for in an iterative manner. The equivalent unbounded flow velocity is calculated and compared to that predicted by Glauert.

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