McDonald's Corporation has a beginning retained earnings of $5,000,000. During the year, the company reports net income of $2,500,000 and pays dividends of $1,200,000. Calculate: a) The ending retained earnings. b) The effect on retained earnings due to net income. c) The effect on retained earnings due to dividends. d) The total amount of dividends paid. e) Explain the importance of retained earnings in financial decision-making.