Equilibrium is what you are after. Volume of mercury displaced * density of mercury = iron sphere mass. When you add water, what changes?
I think this assumes the density of air is zero, which is a good approximation.
Volume of mercury displaced * density of mercury + Volume of air displaced * density of air = iron sphere mass.
This should be a good hint.

Question about bouyancy... Looking for a hint
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Here is a thought experiment that may make the solution clearer.
If you weighed an iron ball in a vacuum would it weigh the same as it weighs at the bottom of a swimming pool? By weight I mean the force the ball would apply to a scale.
In a vacuum the iron ball would weigh
[mass of iron * acceleration due to gravity]
Gravity pulls the ball down and there is no force pushing up.
On the other hand at the bottom of a pool it would weigh
[mass of iron * acceleration due to gravity - mass of displaced water * acceleration due to gravity]
Gravity pulls the ball down but there is now a buoyancy force pushing up on the ball.
Would the iron ball need to sink as far into mercury to support its weight at the bottom of a swimming pool as it would in a vacuum?
edit to improve clarity ???