It will fit. You can probably save a few bucks by buying the parts individually as opposed to the IPD kit. At least I did. But I haven't compared prices recently. The kit is ready to go, though so you will definitely save a little time by using it, especially considering the enlarger/reducer and straight pipe can be purchased at most local parts houses. I can't vouch for fit between pipes with the IPD kit, though. I like to use the pipe expander to make sure all connections are a good slip fit and will allow for some final adjusment before clamping. Seems like they tend to bind a little bit otherwise.

See this:

http://www.brickboard.com/RWD/volvo/1068669/220/240/260/280/na_turbo_exhaustwhat_parts_get.html.

Pay particular attention to the part about the inlet for the axle pipe. I'm not sure what the deal about that was now but I could crawl under the 242 and have a look. All I remember was I had to enlarge the straight pipe to fit the axle pipe.

Also be advised that the elevated noise level, which I do not find to be great in the 242, is said to be more pronounced in wagons than sedans. If you go this way you'll want to be sure all your connections fit well, as mentioned above, and the clamps are sufficiently tightened.
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'80 DL 2 door, '89 DL Wagon