I have no problem with the diagnosis, but agree that the labor seems high. However, I don't know where the injector is located (my 940 has the Bosch system, yours would have to be Rex/Regina). They're usually right out in the open, but if the intake manifold needs to come off because it's in a weird spot, I can see why the labor would be on the high side. But even then, $986 sounds overkill. Are you sure they didn't suggest starting with the fifth injector, and maybe quoted parts and labor for a worst case scenario like replacing the lift pump in the tank?

If I was working on the car, and suspected the fifth, I would either:
1) remove the injector to see if it bleeds out overnight (or maybe even energize the pump with it out by turning the ignition to on with the car off)
2) simply put a hose pinch off plier on the line going to the injector (they're separate from the fuel rail), let it sit overnight or however long is necessary to present the symptoms, and see if that solves the issue.
This second method certainly wouldn't take more than minutes, and can rule out a leaky injector.

Anyway, I feel the injector suspicion can be verified without needing to replace it. However, it's been 20 years since I wrenched professionally, and I'm just a random voice on the internet.

If you are uncomfortable with either the price, or aptitude of this mechanic, then get a second opinion. Most pro mechanics in their early 40's or younger started out after OBDII was introduced, and may not have much experience with these older systems. That doesn't make them bad mechanics, but experience counts a lot. I think there is a TSB from Volvo for a leaky cold start injector, and that may be why the tech is gravitating to that as the most likely cause. However, after 31 years, this may have already been addressed, and as said, I think there's a better way to go about it. Sometimes swapping the part makes the most sense, but based on my experience, this isn't one of those cases.

Check for black smoke from exhaust on cold startup when the problem occurs (maybe get someone to start the car while you check, as it will be brief). A leaky fifth will not only let fuel line pressure drop, but it will let raw fuel pool up in the intake after the car is shut down, which might cause the smokey startup. If the fifth is leaking badly enough, it will leak while car is running, and probably cause the idle to hunt.

Best of luck in solving this cheaply, and hopefully someone experienced with the Regina system can chime in with more specific guidance.