• Heat oven to 350ºF.
• Grease the bottom and sides of 3 round pans that are either 8" or 9" round by 1 1/2" deep. Line the bottoms of the pans with waxed paper or cooking parchment paper.
• Heat the chocolate and water in a 1 quart saucepan over low heat, stirring until the chocolate is melted. Cool.
• Beat the sugar and margarine in a medium bowl with an electric mixer on high speed until light and fluffy. Beat in the eggs, one at a time. Beat in the chocolate and vanilla on low speed. Add the remaining ingredients. Beat on low speed just until blended.
• Pour into the three baking pans. Bake 8 inch rounds 35-40 minutes or 9 inch rounds 30-35 minutes, or until a toothpick inserted in the center comes out clean.
• Cool for 10 minutes then remove from pans to a wire rack. Remove the paper and cool completely.

To Make the Frosting:

• Mix the sugar, margarine, milk, vanilla and egg yolks in a 2 quart saucepan. Cook over medium heat for 12 minutes, stirring occasionally, until thick. Stir in the coconut and pecans. Cool for 30 minutes, beating occasionally, until the mixture is spreadable.
• Fill the layers and frost the top of the cake with the frosting, leaving the sides of the cake unfrosted.