A potential based panel method is used to predict the open water characteristics of spade-type rudders. The inflow velocity is assumed to be constant in lime and uniform in space. Source and dipole are distributed on the rudder surface. It is assumed that the wake surface is streaming from trailing edge and it is represented by dipole distribution. In this paper, wake geometry is assumed by imposing appropriate conditions at the trailing edge and far from the body. The effects of wake geometry are studied. The pressure Kutta condition is applied at the trailing edge, the effects of which are compared with those of two-dimensional Kutta condition. The results of calculations for a spade-type rudder are compared with published results. It is concluded that this approach shows fairly good agreement with experimental results and can be used in the initial design stage of a rudder.