bavspeed

I would just have the equivalent of a PPI done every couple of years...
It's not expensive and it's peace of mind.
Don't do the warranty. Bad investment.
Save the equivalent in a savings account. But, be disciplined. Don't spend it on mods or movies!!
And do the maintenance. It'll last you several more years!

kushane

Depending on if you are willing to do some of the more basic repairs and maintenance yourself you'll come out way ahead with with option #2. I have 05 530i with 82k miles, and so far I've had to replace the starter, brakes, CCV, spark plugs, and next week, I'll be attacking the oil filter housing gasket, and valve cover gaskets. Doing all the work myself - parts cost has been less than $500 excluding brakes, which wouldn't be covered under warranty anyway.

Also had the dreaded SRS warning come up a couple of times and I invested a little time to buy the K+DCAN cable software and learn to use the software to do everything from reset the warnings to help diagnose, and even code options like to retrofit the aux cable.

I've mostly owned front-wheel drive cars in the past and the E60 is a lot easier to work on, and there is so much DIY support on these forums. So if you don't already work on your car, consider getting into it now and go with option #2. My guess is you'll have a majority of it still left at the end, which you can then spend on maintenance items warranty will not have covered (brakes, struts etc).

Good luck!