We may apply a mass balance to determine the amount of water that must be added. The concentration in each of the solutions:
Saline solution: 18%
Pure water: 0%
Final solution: 10%
The volume of each solution is:
Saline solution: 16 oz
Pure water: w
Final solution: 16 + w oz
The moles of a substance are equal to the product of the concentration and volume. Therefore:
16*0.18 + w*0 = (16 + w)*0.1
w = 12.8 ounces
The volume of distilled water that must be added is 12.8 ounces.