Initial moment of inertia of sphere:
\[
I = \frac{2}{5} MR^2
\]
New mass \( M' = M \cdot \left(\frac{1}{8}\right) \) (volume is \( \frac{1}{8} \))
New radius \( R' = \frac{R}{2} \)
\[
I' = \frac{2}{5} \cdot \frac{M}{8} \cdot \left(\frac{R^2}{4}\right) = \frac{2}{5} \cdot \frac{M R^2}{32} = \frac{1}{32} \text{ of original } I
\]