Explanation:

The Gordon growth model has several key assumptions and requirements for proper application:

1. Constant dividend growth rate - The model assumes dividends grow at a constant rate forever
2. Required return > growth rate - The required return on equity must exceed the dividend growth rate (r > g)
3. Sustainable growth rate - The growth rate should be sustainable in the long run

Analysis of the given data:

• Expected future dividend growth rate: -3% (negative)
• Required return on equity: 7.5%
• Most recent dividend growth rate: 8%
• Nominal GDP growth rate: 3.5%

Key issue: The Gordon growth model cannot be used when the expected dividend growth rate is negative. The model's formula $P_0 = \frac{D_1}{r - g}$ breaks down when g is negative because:

• The denominator (r - g) becomes larger than r
• The model assumes perpetual growth, which is not meaningful with negative growth
• Negative growth implies the company is shrinking, which contradicts the perpetual growth assumption

While the most recent dividend growth rate of 8% exceeds the required return of 7.5%, this alone doesn't invalidate the model. The critical issue is the negative expected future growth rate.

Therefore, the Gordon growth model is not appropriate because the expected future dividend growth rate is negative.