If I had storage space, I would buy your car - I love having a clutch!
Have your mechanic pull the spark plug and use a bore scope to take a look at the valve and cylinder. He could look at all 5 and get a better diagnosis.
At a minimum, you are looking at head removal, multiple valve replacement and valve seat repair. Figure $800-1000 for "out of car" repair costs JUST for the head.
Fortunately, this is not a turbo so less work involved in head removal and put back.
There is an outfit that specializes in head repair:
https://www.cylinder-heads.com/automotive-cylinder-heads/volvo/?gclid=Cj0KCQiAweaNBhDEARIsAJ5hwbdMm6_VpXbqN197bXnsm4iLdQiI_wC-tvdWI0jCcGpSBmDCXmMijI4aAozjEALw_wcB
You might want to E-mail them and see if they still do heads for Volvos. They claim to replace all 20 valves, valve seats, flatten the block side, etc. Used to be $800, who knows how much now?
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Keeping it running is better than buying new
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