why is it divided by 2?

if you see the diagram here, diagonal is AC and if we want to have the shortest distance to the surface of sphere, we can calculate it either from A or C

Hence to calcuate the shortest distance, we have subtracted the diameter from the diagonal and then divided by 2 (for either from A or C).

draw the figures in geometry questions for sure (wherever possible), it helps is better visualisation and then it becomes comparatively easy to solve it further.

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Thank you!