Optimization of the measurement sensitivity using closed form analytical expressions derived from an electrical equivalent circuit is carried out for microwave detected photoconductance decay system used for nondestructive carrier lifetime measurement in silicon wafers. The effect of transverse inhomogeneity in the sample conductivity on the microwave power reflection is discussed using the equivalent circuit model. The effect of lateral inhomogeneity in the sample conductivity due to local illumination by a source with a laterally varying intensity is studied using an elaborate analytical two-dimensional model. Finally, the effect of transient lateral carrier diffusion in a sample subjected to a pulsed illumination on the extracted value of the lifetime is investigated. ©1997 American Institute of Physics.