Cream butter; gradually add sugar, and beat at high speed of an electric mixer 10 minutes. Add eggs, one at a time, beating well after each addition.
Combine flour, baking powder, and salt; add to creamed mixture alternately with milk, beginning and ending with flour mixture. Add coconut extract, beating well. Fold in flaked coconut.
Pour batter into a greased and floured 10-inch tube pan. Place pan in a cold oven. Bake at 300° for 1 hour and 45 minutes. Cool in pan 10 to 15 minutes; remove cake from pan, and cool completely.