Heat Water (1/4 cup) and Milk (3/4 cup) to 105-110 degrees F (40-43 degrees C). Add Instant Dry Yeast (1 package) and wait 5 minutes for yeast to proof.
Mix in milk mixture, Granulated Sugar (1/4 cup), Salt (1 teaspoon), Egg (1), Butter (1/4 cup), and All-Purpose Flour (3 1/4 cup).
Turn dough out onto floured surface and knead for 3-5 minutes, until dough is smooth and elastic.
Place dough in greased bowl. Cover and allow to rise for 1 hour.
Form dough into rolls and place on baking sheet. Allow dough to rise for 20 minutes.
Bake at 400 degrees F (200 degrees C) for 13-15 minutes.