The required rate of return from a project is 10% and the internal rate of return of the project is 12%, hence the project should be

1. Break Down the Problem

The question requires us to evaluate whether the project is acceptable based on its required rate of return (RRR) and internal rate of return (IRR).

2. Relevant Concepts

• Required Rate of Return (RRR): The minimum return an investor expects to achieve for the level of risk associated with the investment.
• Internal Rate of Return (IRR): The discount rate at which the net present value (NPV) of all cash flows (both positive and negative) from a project equals zero.

3. Analysis and Detail

Given:

• Required Rate of Return (RRR) = 10%
• Internal Rate of Return (IRR) = 12%

To determine the project's viability:

• Since the IRR (12%) is greater than the RRR (10%), the project is expected to generate a return higher than the investor's required rate. This indicates that the project is likely to add value and is a viable investment option.

4. Verify and Summarize

The IRR exceeding the RRR indicates that the project meets the financial benchmarks required for profitability. Therefore, it should be accepted as it suggests profitable returns.

Final Answer

The project should be accepted since the IRR (12%) is greater than the RRR (10%).