Now, my question is that I want to know if this is acceptable?

The prior paragraph spoke of rape. It is clear whether you consider the story to be acceptable, so presumably you're asking about whether inclusion of the professor's extra material is acceptable.

Actually, no. And, specifically, here's what is not acceptable with including all of this material:

For example, there is a Calvin and Hobbes comic strip on almost every other page and the content of the strips are not in the least related to accounting.

This is likely a violation. UniversalUClick FAQ page on Reprints has a FAQ's answer which says, "All correspondence for Bill Watterson is handled by our office. Mr. Watterson does not make his contact information public." (He's the creator of Calvin and Hobbes.) EmuReprints: Educational Use seems to indicate that up to 7 strips can be used. Your description ("almost every other page" of "a large binder") makes it sound like this book violates the granted permission. (The violation seems particularly unnecessary since he could just include URLs to a legal references. Namely, I believe that Calvin and Hobbes online is likely to be fully legal.)

I also think that including the entire story of "Sleeping Beauty" is quite a bit of material that is off-topic from the class's main subject of accounting. If this is included in "required reading", then this may be a bit disrespectful of students' time.

Now, I think most of the question was intended to be something other than Copyright or respect. Much of the question was about rape, so let's focus on that aspect. As the question summarized the story (but with the emphasis added by myself)...

One day a rich king comes [...] so he rapes her because she's so beautiful. This young woman eventually gives birth to twins [... later...] the young woman considers her rape and rapist blessings and is thankful for said horrific rape.

I understand that this "king" did not follow our modern society's rules of ensuring her explicit permission, since she was unconscious. Before we impose our ideals upon this fictitious man and demonize his criminal act of violating the woman's rights, we should remember how much weight our beliefs deserve to have as we ponder such a situation. The story's authors (including some of the story's updaters over the centuries) had very different perspectives than many modern opinions.

While considering these attitudes, my goal is not to acquit the king's actions, but rather to quickly investigate how this action would have been understood by the authors, the likely recipients (who read this story or, more likely, hear it), and the characters within the story. I'm not even trying to touch upon the topic of what our judgments or attitudes should be. I'm simply saying, let's momentarily consider what the impact of the culture's values would have been, and how they would have influenced the thoughts of people living in this era.

The society (which created this story) may have been prone to heavily honor an act which essentially converted a virgin into a mother. Since this young woman's culture embraced child-making as a feminine duty, she may have felt greatly benefited by the increased dignity of being a mother, not to mention the pleasure of being able to raise children without consciously needing to suffer morning sickness and going through labor. She may not have been very concerned about the idea of her rights being violated because she was a part of a society that did not officially grant women with these rights, and which was a society that promoted raising children more than other values that our society holds more dear (like a woman being able to exert more control over her role in society).

I'm not saying that the woman would have liked every aspect of the story, nor that every woman would have such an attitude/decision. I am simply pointing out some existing culture influences that made such attitudes feel a bit more believable in that culture than this culture.

Besides the evidence of the woman apparently embracing the situation she found herself in, there is additional evidence that the visiting king broke neither any law of the land, nor performed any action that would be viewed as a terrible violation of the sleeper. He not only returned to the land, he checked on her and freely confessed what he had done. Had he impregnated a woman, and then left her to raise offspring on her own, then that would likely have been terribly disgraceful to that society. What he actually did (which is to perform his role in starting the child-making process, and then follow up) would not have been judged nearly as harshly by that society (as compared/contrasted to how those same actions would have been condemned by ours).

In order to answer to the main question here, we actually do not need to determine which society values are superior. Whether the content of the story is good, including whether the story was ever suitable for children, is also an entirely different question from a more applicable point, which is whether college students should see the results (this story) of what historically happened (when the story was created and shared). The big question here is whether inclusion of this story was "acceptable". To that end, I would ask two questions:

Is exposure to such material an appropriate thing for people who are old enough to be in college?

Is it right for colleges to point out some of the different attitudes exposed by different cultures?

To the first question, I suggest the answer is yes, for the same reason that studying atrocities in history, including death found in war, is worthwhile.

If this story's inclusion led to you thinking about different values (even indirectly, by getting a student so incensed that a question got posted on Academia.StackExchange.com), then I'm inclined to think that the story's inclusion successfully performed the role of helping to accomplishing the mission and purpose of higher education, which is to get people to be more familiar with certain aspects of life.

In some cases, determining what "is acceptable" can be rather clear-cut if we accept some standards that are presumably likely to be very common ground, such as disapproving of copyright violations. In many other cases, determining the real answer to what "is acceptable" may be subject to individual opinions. So, I will share with you mine.

Perhaps this story was inappropriate to include in an accounting class because it is off-topic, more properly belonging to a class in humanities, history, or literature. Maybe the professor just wanted to help students in ways other than just economics/math. I personally am not in strong favor of having this included, but the reason is not because I feel the professor had an obligation to avoid these origins of a widely respected story. Despite my inclination to not include such material, since my experience as a college instructor, I am rather inclined to lean in favor of giving instructors significant liberty to design their course. So, although I find the Calvin and Hobbes material to be an unacceptable inclusion for entirely different reasons, and although I disagree with the decision to include this Sleeping Beauty variant as arguably off-topic material (and I do not believe I would be prone to making the same decision myself), I am currently thinking that I find this story's inclusion to be within the realm of what I would consider to be acceptable.

Since I'm judging the inclusion to be "acceptable" (not necessarily preferable, but within the realm of acceptability), if I were overseeing the instructor, the actions I think I would probably make would be to pass along the feedback for the instructor's consideration, but not make any reprimand or formal actions that would negatively affect the instructor, nor to order any changes. I would continue to leave this at instructor discretion.

I know this answer is already a bit long, but before I end, I like to provide complete answers, so I will address some remaining questions/comments:

Can my university (a state university) legally, ethically, and morally publish this to their students in a faculty made textbook?

Regarding what is legal, that will determine where you live. Since you mention "a state university", I am inclined to believe you are referring to America. Due to the nation's freedom of speech, I find it highly likely that this will be completely legal. I would guess that even the vague descriptions of sexual activity (such as the story saying “he decided to follow the tenets of Venus”) would probably even be legal for teenagers, and much more for adults. If you happen to disagree, well, you could pursue exploring that further if you like. This isn't really the forum for exploring legality in any depth.

Regarding ethics/morals, I think that was covered by my previous assessment (about what is "acceptable").

I want to take action but I am not sure if this is even allowed and do not want to make a fool of myself.

I'm taking this as a few implied questions:

what action should you take?

is something (action?) allowed?

and: how to not make a fool of yourself?

Your best bet is likely to find that the actions violated a policy of the university, college, or department. Many places that do have such a policy may have an established process on how to handle problems, so if you wish to pursue this further, start by checking if there is a formal process. You've already spoken to the instructor. If you wish to take further actions that are not very formal, but which may impact this instructor's behavior, your best bet may be to contact the office of the department chair/head, or the office of a dean. Conceivably, either position could have someone address the issue directly, or provide you with guidance on how to pursue the matter further. Unfortunately, since different institutions (universities, or even departments) may have some variances in how they operate, with different people being involved, I can't give you universal advice on what would be more effective. However, if the department chair doesn't handle things, you might still have an open door to escalate to the dean. So I would suggest checking within the department. Before taking additional action, though, I would consider what you would hope to be accomplishing at this point.

For the second bullet point, that will depend on policies. Again, I state that I have no universal advice due to policies/procedures that differ.

Finally, about how to not make a fool of yourself: don't be demanding. In my opinion, mentioning that you are offended may work in your favor, or against you. (Perhaps both. Perhaps depending on your audience(s).) Your best bet may be to start by researching any published policies, and then have your next step be to ask questions in informal contexts, being willing to go from the bottom up, before trying taking any actions.