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In a 2-cup liquid measure, dissolve yeast and 1 teaspoon sugar in warm water. Let stand until foamy, about 5 minutes.
Insert dough blade in work bowl; add flour, 3 tablespoons sugar, salt and butter. Pulse on dough speed for 10 seconds.
Add milk, cold water and egg to yeast mixture. With machine running, pour mixture through feed tube in steady stream, only as fast as flour will absorbs it. Dough is soft and will not clean sides of bowl. Continue processing an additional 60 seconds to knead dough. Open lid to check dough consistency. If dough is stiff and somewhat dry, add 1 teaspoon water; if soft and sticky, add 1 tablespoon flour. Close lid and process for 10 seconds. Check dough consistency again, making additional adjustments if necessary.
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