1 1/2 cups vegetable oil
2 cups grated carrots
4 egg yolks
3 1/2 teaspoons hot water
2 cups granulated sugar
2 1/4 cups all-purpose flour
2 1/2 teaspoons cinnamon
1 1/2 teaspoons nutmeg
1 1/2 teaspoons baking powder
1/2 teaspoon salt
4 egg whites, beaten until stiff
1/2 cup nuts
1/2 cup coconut

Mix together well all ingredients except egg whites, nuts and coconut. Fold in egg whites. Fold in nuts and coconut. Bake in 3 layers for 35 to 40 minutes at 325 degrees F.

Frosting
8 ounces cream cheese
1/2 cup (1 stick) margarine
1 teaspoon vanilla extract
Confectioners sugar
1 cup nuts

Cream together the cream cheese, margarine and vanilla extract. Add confectioners' sugar until creamy. Add nuts. Frost the three layers.