Some interesting thoughts on the point of diminishing returns here, I can't speak for all of the cars here but I can speak for the 540i, and I have driven quite a few other BMWs too.
Well the 540i is probably the 'one' to have if you want effortless power, it's a different experience to the sixes (105lbs/ft more torque than the M54B30 and it comes in lower down the rev range) and a lot cheaper to run and rather less highly-strung than the M5 ...also you can have in with an automatic gearbox (you'd be lucky to find a decent manual) ...not only that but it'll cost you a 'lot' less to insure than an M5 too.
Bear in mind that although there is a considerable horsepower difference between an E39 M5 and a 540i, the torque difference is actually quite small relative to the power difference. The M62TU in the 1998+ 540i has 325lbs/ft of torque and the S62 in the M5 has about 369lbs/ft.
Not only this but the 540i makes maximum power at about 5400rpm for the M5 it's not until 6600rpm ...incidentally the 540i wont even rev that high ...indeed the 540i feels more or less spent past 5400rpm, there is actually little point in bouncing it off the rev limiter.
Now this is an unqualified opinion I am about to state and I do not have any evidence to back it up, but to me, personally ...the 540i feels like it makes more than 286bhp, ...more like about 300bhp I reckon, I've driven plenty of cars of similar power and of similar weight, lighter and heavier ...and the M62TU never fails to impress me, I 'think' it hits harder than BMW like to say it does, but I have nothing to base this on other than my own instinct and feelings ...which mean sod all here I am sure.
As I said though, the sixes are quite different to drive, actually they have better steering and feel better balanced ...but they do lack the effortlessness of the V8s, it's hard describe exactly but the V8s just feel a lot more muscular.
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