diff --git a/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/DefaultPaymentPeriodsInOneYearCalculator.java b/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/DefaultPaymentPeriodsInOneYearCalculator.java
index 973f53d18c..e8e9a65fb8 100644
--- a/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/DefaultPaymentPeriodsInOneYearCalculator.java
+++ b/fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/DefaultPaymentPeriodsInOneYearCalculator.java
@@ -86,10 +86,10 @@ public class DefaultPaymentPeriodsInOneYearCalculator implements PaymentPeriodsI
         BigDecimal repayEveryBD = BigDecimal.valueOf(repaidEvery);
         BigDecimal noDaysInterestCalculationGrace = BigDecimal.valueOf(numberOfDaysInterestCalculationGrace);
         return switch (repaymentPeriodFrequencyType) {
-            case DAYS -> noDaysInterestCalculationGrace.multiply(repayEveryBD, mc);
-            case WEEKS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(7), mc).multiply(repayEveryBD, mc);
-            case MONTHS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(30), mc).multiply(repayEveryBD, mc);
-            case YEARS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(365), mc).multiply(repayEveryBD, mc);
+            case DAYS -> noDaysInterestCalculationGrace.divide(repayEveryBD, mc);
+            case WEEKS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(7).multiply(repayEveryBD), mc);
+            case MONTHS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(30).multiply(repayEveryBD), mc);
+            case YEARS -> noDaysInterestCalculationGrace.divide(BigDecimal.valueOf(365).multiply(repayEveryBD), mc);
             case WHOLE_TERM -> {
                 log.error("TODO Implement repaymentPeriodFrequencyType for WHOLE_TERM");
                 yield BigDecimal.ZERO;
diff --git a/fineract-loan/src/test/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/PaymentPeriodGraceFractionTest.java b/fineract-loan/src/test/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/PaymentPeriodGraceFractionTest.java
new file mode 100644
index 0000000000..c9c5973e74
--- /dev/null
+++ b/fineract-loan/src/test/java/org/apache/fineract/portfolio/loanaccount/loanschedule/domain/PaymentPeriodGraceFractionTest.java
@@ -0,0 +1,90 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.portfolio.loanaccount.loanschedule.domain;
+
+import static org.junit.jupiter.api.Assertions.assertEquals;
+
+import java.math.BigDecimal;
+import java.math.MathContext;
+import java.time.LocalDate;
+import org.apache.fineract.portfolio.common.domain.PeriodFrequencyType;
+import org.junit.jupiter.api.Test;
+
+class PaymentPeriodGraceFractionTest {
+
+    private final DefaultPaymentPeriodsInOneYearCalculator calculator = new DefaultPaymentPeriodsInOneYearCalculator();
+    private final LocalDate start = LocalDate.of(2026, 1, 1);
+
+    @Test
+    void sevenDaysOfGraceInTwoWeeksShouldBeHalfAPeriod() {
+        assertFraction("0.5", start.plusDays(14), start.plusDays(7), PeriodFrequencyType.WEEKS, 2);
+    }
+
+    @Test
+    void oneDayOfGraceInTwoDaysShouldBeHalfAPeriod() {
+        assertFraction("0.5", start.plusDays(2), start.plusDays(1), PeriodFrequencyType.DAYS, 2);
+    }
+
+    @Test
+    void doublingThePeriodShouldHalveTheGraceFraction() {
+        assertFraction("0.25", start.plusDays(28), start.plusDays(7), PeriodFrequencyType.WEEKS, 4);
+    }
+
+    @Test
+    void thirtyDaysOfGraceInTwoStandardMonthsShouldBeHalfAPeriod() {
+        assertFraction("0.5", start.plusDays(60), start.plusDays(30), PeriodFrequencyType.MONTHS, 2);
+    }
+
+    @Test
+    void oneStandardYearOfGraceInTwoStandardYearsShouldBeHalfAPeriod() {
+        assertFraction("0.5", start.plusDays(730), start.plusDays(365), PeriodFrequencyType.YEARS, 2);
+    }
+
+    @Test
+    void sameDateIntervalShouldAgreeAcrossDaysAndWeeks() {
+        BigDecimal daily = calculator.calculatePortionOfRepaymentPeriodInterestChargingGrace(start, start.plusDays(14), start.plusDays(7),
+                PeriodFrequencyType.DAYS, 14, MathContext.DECIMAL64);
+        BigDecimal weekly = calculator.calculatePortionOfRepaymentPeriodInterestChargingGrace(start, start.plusDays(14), start.plusDays(7),
+                PeriodFrequencyType.WEEKS, 2, MathContext.DECIMAL64);
+
+        assertEquals(0, daily.compareTo(weekly));
+    }
+
+    @Test
+    void entirePeriodOfGraceShouldRemainOne() {
+        assertFraction("1", start.plusDays(14), start.plusDays(14), PeriodFrequencyType.WEEKS, 2);
+    }
+
+    @Test
+    void missingGraceDateShouldRemainZero() {
+        assertFraction("0", start.plusDays(14), null, PeriodFrequencyType.WEEKS, 2);
+    }
+
+    @Test
+    void noGraceAtStartShouldRemainZero() {
+        assertFraction("0", start.plusDays(14), start, PeriodFrequencyType.WEEKS, 2);
+    }
+
+    private void assertFraction(String expected, LocalDate due, LocalDate chargedFrom, PeriodFrequencyType frequency, int every) {
+        BigDecimal actual = calculator.calculatePortionOfRepaymentPeriodInterestChargingGrace(start, due, chargedFrom, frequency, every,
+                MathContext.DECIMAL64);
+
+        assertEquals(0, new BigDecimal(expected).compareTo(actual), () -> "Expected " + expected + " but got " + actual);
+    }
+}