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That might be reasonable for the work, but is it necessary? You could potentially save a LOT of money by buying a used trans for a few hundred dollars and then paying the labor to install it. You could get a used trans for under $100 from a junkyard, but other than looking at the fluid to see if it's burned or not, you can't really determine if it works. If you're paying for labor, you might want to buy a trans that you know will work. The first thing that comes to mind is Brian Leppin in MD who sells Volvo parts. His transmissions often come with a warranty of about 90-100 days, which is pretty good. His prices are often very good too, and I believe he'll ship anywhere in the US. See www.volvousedparts.com.
Another option would be to find someone who's parting out a car that has the same trans as the one you need, and hopefully you could drive the car before pulling the trans. There are also some other used parts sources on my links page, including Revolvstore which may be able to supply a good used trans.
Good luck.
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Michael -- 1987 244 GT | Volvo 240 Links
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