diff --git a/src/Microsoft.Identity.Web.TokenAcquisition/MergedOptions.cs b/src/Microsoft.Identity.Web.TokenAcquisition/MergedOptions.cs
index 3a16dc8b6..62606f3d5 100644
--- a/src/Microsoft.Identity.Web.TokenAcquisition/MergedOptions.cs
+++ b/src/Microsoft.Identity.Web.TokenAcquisition/MergedOptions.cs
@@ -473,9 +473,14 @@ internal static void UpdateMergedOptionsFromJwtBearerOptions(JwtBearerOptions jw
 
         public void PrepareAuthorityInstanceForMsal()
         {
+            if (string.IsNullOrEmpty(Instance))
+            {
+                return;
+            }
+
             if (IsB2C && Instance.EndsWith("/tfp/", StringComparison.OrdinalIgnoreCase))
             {
-#if !NETSTANDARD2_0 && !NET462 && !NET472
+#if NETCOREAPP
                 PreparedInstance = Instance.Replace("/tfp/", string.Empty, StringComparison.OrdinalIgnoreCase).TrimEnd('/') + "/";
 #else
                 PreparedInstance = Instance.Replace("/tfp/", string.Empty).TrimEnd('/') + "/";
diff --git a/tests/Microsoft.Identity.Web.Test/MergedOptionsTests.cs b/tests/Microsoft.Identity.Web.Test/MergedOptionsTests.cs
index 5be93e2dc..d207c8138 100644
--- a/tests/Microsoft.Identity.Web.Test/MergedOptionsTests.cs
+++ b/tests/Microsoft.Identity.Web.Test/MergedOptionsTests.cs
@@ -10,7 +10,7 @@ namespace Microsoft.Identity.Web.Test
 {
     public class MergedOptionsTests
     {
-        // appliation options
+        // application options
         private readonly string _appOptionsAuthority = "microsoftIdentityApplicationOptionsAuthority";
         private readonly string _appOptionsAzureRegion = "microsoftIdentityApplicationOptionsAzureRegion";
         private readonly string[] _appOptionsClientCapabilities = new string[] { "microsoftIdentityApplicationOptionsClientCapabilities" };
@@ -24,7 +24,7 @@ public class MergedOptionsTests
         private readonly string _appOptionsPasswordRestId = "microsoftIdentityApplicationOptionsResetPasswordPolicyId";
         private readonly string _appOptionsSuSiPolicyId = "microsoftIdentityApplicationOptionsSignUpSignInPolicyId";
         private readonly string _appOptionsTenantId = "microsoftIdentityApplicationOptionsTenantId";
-        private readonly IEnumerable<CredentialDescription> _appOptionsTokenDecyrptCreds = new CredentialDescription[] { new CredentialDescription() };
+        private readonly IEnumerable<CredentialDescription> _appOptionsTokenDecryptCreds = new CredentialDescription[] { new CredentialDescription() };
 
         // MS Identity options
         private readonly string _msIdentityOptionsAccessDeniedPath = "/microsoftIdentityOptionsAccessDeniedPath";
@@ -85,7 +85,7 @@ public void UpdateMergedOptionsFromMicrosoftIdentityApplicationOptions_Then_Defa
             microsoftIdentityApplicationOptions.SendX5C = true;
             microsoftIdentityApplicationOptions.SignUpSignInPolicyId = _appOptionsSuSiPolicyId;
             microsoftIdentityApplicationOptions.TenantId = _appOptionsTenantId;
-            microsoftIdentityApplicationOptions.TokenDecryptionCredentials = _appOptionsTokenDecyrptCreds;
+            microsoftIdentityApplicationOptions.TokenDecryptionCredentials = _appOptionsTokenDecryptCreds;
             microsoftIdentityApplicationOptions.WithSpaAuthCode = true;
 
             // Act
@@ -118,7 +118,7 @@ public void UpdateMergedOptionsFromMicrosoftIdentityApplicationOptions_Then_Defa
             Assert.True(mergedOptions.SendX5C);
             Assert.Equal(_appOptionsSuSiPolicyId, mergedOptions.SignUpSignInPolicyId);
             Assert.Equal(_appOptionsTenantId, mergedOptions.TenantId);
-            Assert.Equal(_appOptionsTokenDecyrptCreds, mergedOptions.TokenDecryptionCredentials!);
+            Assert.Equal(_appOptionsTokenDecryptCreds, mergedOptions.TokenDecryptionCredentials!);
             Assert.True(mergedOptions.WithSpaAuthCode);
         }
 
@@ -239,5 +239,58 @@ public void UpdateMergedOptionsFromMicrosoftIdentityOptions_ThenMicrosoftIdentit
             Assert.True(mergedOptions.UseTokenLifetime);
             Assert.True(mergedOptions.WithSpaAuthCode);
         }
+
+        [Theory]
+        [InlineData("https://login.microsoftonline.com", "https://login.microsoftonline.com/")]
+        [InlineData("https://login.microsoftonline.com/", "https://login.microsoftonline.com/")] // Already has trailing slash
+        public void PrepareAuthorityInstanceForMsal_PreparesInstance_WhenInstanceIsSet(
+            string instance,
+            string expectedPreparedInstance)
+        {
+            // Arrange
+            var options = new MergedOptions { Instance = instance, TenantId = "common" }; // TenantId is set, so Authority shouldn't be parsed
+
+            // Act
+            options.PrepareAuthorityInstanceForMsal();
+
+            // Assert
+            Assert.Equal(expectedPreparedInstance, options.PreparedInstance);
+            Assert.Equal(instance, options.Instance); // Original Instance remains unchanged
+        }
+
+        [Fact]
+        public void PrepareAuthorityInstanceForMsal_DoesNothing_WhenAuthorityAndInstanceAreNull()
+        {
+            // Arrange
+            var options = new MergedOptions();
+
+            // Act
+            options.PrepareAuthorityInstanceForMsal();
+
+            // Assert
+            Assert.Null(options.Instance);
+            Assert.Null(options.TenantId);
+            Assert.Null(options.PreparedInstance);
+        }
+
+        [Fact]
+        public void PrepareAuthorityInstanceForMsal_DoesNotParseAuthority_WhenInstanceAndTenantIdAreSet()
+        {
+            // Arrange
+            var options = new MergedOptions
+            {
+                Authority = "https://login.microsoftonline.com/common", // Should be ignored
+                Instance = "https://login.microsoftonline.us/",
+                TenantId = "organizations"
+            };
+
+            // Act
+            options.PrepareAuthorityInstanceForMsal();
+
+            // Assert
+            Assert.Equal("https://login.microsoftonline.us/", options.Instance); // Instance remains unchanged
+            Assert.Equal("organizations", options.TenantId); // TenantId remains unchanged
+            Assert.Equal("https://login.microsoftonline.us/", options.PreparedInstance); // PreparedInstance based on original Instance
+        }
     }
 }