In this paper sound propagation through an air-filled circular duct containing water droplets has been studied by solving numerically one-dimensional linearized Euler equations in frequency domain. Interactions between the liquid and gas phases were accounted for by proper source terms. Waves were introduced into the domain via Perfectly Matched Layers (PML) equations applied in finite regions adjacent to the truncated ends of the duct. Absorption and dispersion results due to energy transfer from air to the water droplets were obtained as a function of average droplet diameter and droplet concentration as well as finite mass loading. Results agree well with those available in the literature.