Step 1: Use the volume formula of a cone.
\[
V = \frac{1}{3}\pi r^2 h
\]
Step 2: Substitute given values.
\[
V = \frac{1}{3}\pi (3.5)^2 (12)
\]
\[
V = \frac{1}{3}\pi (12.25)(12) = \frac{147}{3}\pi = 49\pi \, \text{cm}^3
\]
Step 3: Final Answer.
\[
\boxed{V = 49\pi \, \text{cm}^3 \approx 153.94 \, \text{cm}^3}
\]